CABLE & WIRELESS Plc last month forecast a grim year ahead as it revealed figures that showed the cost of its ambitious attempt to create a global data network based on Internet technology.
The British telecommunications company posted a net loss of US$7.42 billion for the year ended March 31, after writing off more than US$7.5 billion on acquisitions and excess capacity, mostly at the company's C&W Global unit.
C&W also announced that Chairman Ralph Robins will step down at the end of December, and be replaced by David Nash. Mr. Nash is a non-executive director of the group, and chairman of the audit committee. The company said Mr. Robins, who turns 70 this year, is retiring.
UNCERTAIN FUTURE
Staring into an uncertain future, C&W limited itself to a six-month forecast that revenue in its global business will grow between 0 per cent and 10 per cent, and that any expansion will come from revenue at the recently incorporated hosting and web services business. In its traditional regional carrier business chiefly based in the Caribbean it expects 0 per cent to 5 per cent growth.
C&W said that Robert Lerwill, currently group finance director and chief executive of the company's C&W Regional unit, will step down as finance director to spend all his time on C&W Regional.
Debt ratings service Moody's, subsequently announced that it had placed the A2 long-term debt ratings and the Prime-1 short-term debt ratings of Cable and Wireless on review for a possible downgrade.
C&W's share price has fallen 61.5 per cent over the year as the company, which bought the dream of cashing in vast increases in demand for shifting data around the globe, found itself struggling to make money in a market awash with surplus capacity. It was the remnants of its old colonial telecoms business that it now terms the Regional business that provided growth, with revenue up 7.5 per cent at US$2.1 billion. The global operation on which C&W bases its future shrank 10.5 per cent to $5.2 billion.
Cable & Wireless has aggressively reshaped itself over recent years, including the disposal in 2000 of the local operator in Hong Kong in a complex deal that netted roughly $10 billion.
It used the proceeds to plunge into the global market for Internet protocol data traffic with its C&W Global unit, including a major expansion in the US.
The company is in no danger of a Chapter 11 bankruptcy filing however, because of a US$3.8 billion cash pile that should enable it to ride out the business fallout.
