Caribbean storm brews over C&W

Milch cow will run dry

ComputerWire: IT Industry Intelligence

Cable & Wireless Plc, which had a stock market valuation of £7.8bn ($12.2bn) a year ago, slumped to a new low of £952.8m ($1.5bn) yesterday, on fears that the company's cash cow in the Caribbean may be eaten by competitors.

The new blow to the troubled carrier came in the form of an internal C&W report leaked to the Financial Times that showed that the company's operations in Jamaica are losing out badly to aggressive new rival Digicel.

The Caribbean operations are the last legacy of C&W's history as providing communications to former UK colonies. Now the Islands are opening their markets to competition, C&W's creaking infrastructure has proved vulnerable.

Digicel, which was set up by Irish entrepreneur Denis O'Brien with the ambition of becoming the Vodafone of the Caribbean, has already grabbed a 65% market share in Jamaica, and now plans to roll out its networks on other islands.

The C&W report reveals that Digicel's GSM networks had 230 cell sites in Jamaica with a further 100 planned by the end of this year. C&W, which uses the older TDMA technology, has only 122 cell sites.

The report says: "Digicel has proved to be adept at rapid strategy execution, guerrilla marketing campaigns and recruiting skilled employees. All these factors have served them well and fuelled the company's confidence regarding their ability to seize other markets in the Caribbean."

The report is damning about C&W's own operations. "Morale is at a record low. The structure creates restrictions in spontaneity or functionality in a competitive environment. There is a lack of capex and the existing mobile system cannot offer the flexibility of functionality of GSM."

C&W recently announced that its Caribbean operations are to be upgraded to GSM next year. However, the fact that it could allow a competitor to grab a 65% share of one of its key markets without an adequate response suggests that the company's senior management in the area needs replacing.

However, there must be suspicion that while the C&W board were happy for its Caribbean operations to compensate for the losses it was running up on its global operation, it was reluctant to provide the investment for it to retain its competitive position.

Meanwhile, C&W said it has rearranged the management of its global operations to give it more focus as it embarks on a £800m ($1.3bn) downsizing. Global chief executive Don Reed will be based in the US, while Adrian Chamberlain, who is currently director of group strategy and corporate development, will take responsibility for all non-US business.

© ComputerWire

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