Feeds

C&W slumps on £1.5bn tax shock

Sunk by junk

  • alert
  • submit to reddit

The essential guide to IT transformation

Cable & Wireless shares slumped more than 40per cent this morning on massive trading in reaction to news that the telco could face a previously undisclosed potential tax liability of £1.5bn. At best the money - almost three quarters of C&W's available cash - could be in escrow for several years, the company admits.

On Friday Moodys cut C&W's rating to junk status, citing fears that the telco cold spend too much on reorganisation. This in turn triggered a clause in the 1999 agreement to sell C&W's half-share in One2One to Deutsche Telekom, which made C&W liable for DT's tax bill. Confused? So are we - the details of the agreement have yet to be released.

C&W believes that it does not owe any money to Deutsche Telekom and will start talks to mitigate the effects of this clause. It also argues that it was under no compulsion to reveal the clause - a remote possibility when the deal was struck to the outside world. And it has the backing of advisor KPMG in making this decision.

The reaction of the stock market and angry analysts today shows that there is little sympathy for this pitch. In recent months, many institutional investors have called for the head of Graham Wallace, C&W CEO. Surely he will go now. Once he's negotiated the inappropriately huge pay-off, of course. ®

5 things you didn’t know about cloud backup

More from The Register

next story
True fact: 1 in 4 Brits are now TERRORISTS
YouGov poll reveals terrible truth about the enemy within
Microsoft exits climate denier lobby group
ALEC will have to do without Redmond, it seems
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Primetime precrime? Minority Report TV series 'being developed'
I have to know. I have to find out what happened to my life
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
7 Elements of Radically Simple OS Migration
Avoid the typical headaches of OS migration during your next project by learning about 7 elements of radically simple OS migration.
BYOD's dark side: Data protection
An endpoint data protection solution that adds value to the user and the organization so it can protect itself from data loss as well as leverage corporate data.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?