Cable & Wireless trims 3,500 jobs
Cable & Wireless is to slash around 3,500 jobs, as first-half losses ballooned to £4.5bn.
In a statement on Wednesday, the beleaguered UK telecoms company said that it had plans to cut around 25 per cent of workers employed in its Global division, which provides data and Internet services to corporations around the world. These cuts, which follow 8,000 job losses since December 2000, will leave the unit with just 9,000 workers. The company's data centres, many of which were bought when Exodus collapsed, will be reduced from 42 to 23.
Also included in the restructuring plan, which will cost about £800m but should lead to costs savings of £600m a year, is a retreat from Continental Europe and the US as well as a reshaping of the company's UK operations. Cable & Wireless said it considered plans to exit the US and European markets altogether, but has instead opted to focus on large-scale multinational customers overseas, and will no longer service smaller clients.
Most of the cuts will take place in the US, it is thought, with the reminder set to take place in the UK. A spokesperson for the company was unable to say what impact the proposed job losses would have on the more than 20 Global division workers based in Ireland.
"The scale of the restructuring we are undertaking represents a major challenge, particularly given the current market turmoil," commented David Nash, the company's chairman designate. "However, the board believes this approach represents the best available option for Global's future by focusing on businesses with potential for growth whilst preserving cash by minimising exit costs and operating cash outflows."
CEO Graham Wallace, who has made ambitious pledges to make the Global unit profitable by the end of next year, made similar comments. "These are tough measures in a tough market but we are committed to achieving our cash flow target for Cable & Wireless Global," the CEO commented. There has been some speculation that Wallace would be called on to resign in the wake of the company's troubles, but he told reporters in a conference call that he had not been asked to leave.
Under Wallace, the UK company invested a massive £5bn in its Global division in the years before the telecoms meltdown, before the price of global data services crumbled. In the US alone, the company spent $1.1bn on acquisitions to compete with the big telecoms there.
But in its results on Wednesday, the firm wrote down the value of its Global division by £3.5bn, leading to pre-tax losses of £4.43bn for the half-year to 30 September. This figure compares to last year's pre-tax loss of £291m. On a per share basis, the company lost £1.945 in the six months, compared with a net loss of £0.203 a year ago. Revenues shrank from £3.3bn to £2.4 bn year-on-year.
Much of Cable & Wireless' suffering in recent months is thought to have come from its US operations, parts of which the firm is now abandoning following earlier restructuring announcements in May. In September, the firm said it was referring around 300 of its US customers to a rival operator, New Edge Network, for £2.5m. Earlier in that month the firm said it had entered into a definitive agreement to transfer its US retail voice customer base to a subsidiary of Primus Telecommunications Group for an aggregate maximum consideration of $32 million in cash, payable over two years.