In a move timed to coincide with their overall company restructure Cable and Wireless has dumped a large part of their channel partners with immediate effect and will lose their Italian CEO, Francesco Caio, at the end of the current financial year. Many observers are commenting that the cumulative financial and operational change announcements made yesterday effectively puts the ‘For Sale’ sign up at the door of the UK’s second largest carrier.
Joanne Wilkinson, Media Relations Manager, told Comms Business Magazine, “Cable & Wireless reviews its channel strategy on an ongoing basis. As a result of our current review, we have chosen to consolidate our indirect channels and will no longer be requiring the services of agency partners in the UK. This will not impact our commitment to serve and support customers who have previously been acquired through this channel. Our relationships with white label and reseller partners remain unchanged. We sincerely wish to thank our agents for their dedication and support.
By agency partners the carrier says they mean partners who sell Cable & Wireless branded products and receive a commission for selling these products. Any supplier who does not fit into that categorisation is not affected.
In the last month or so C&W had signed up distributor Westcon to sell their products and we understand that they, along with Network Partners and Interface Advantage have been axed.
Bernie Dodwell, Alliances Manager at Westcon commented:
I heard about it late Friday – it came out of the blue, you can say I was disappointed given all the preparation both sides had put in to get this relationship off the ground. We signed the deal with them Xmas week and had planned a channel launch in early February – fortunately we were able to pull the plans and the impact on our business is zero. Our loss is in much time and effort getting trained, setting up systems, sorting the contract, interviewing for the role etc.
Since we heard, we’ve had no formal contact with C&W or direct communication explaining the decision – all the contacts we had appear to have gone to ground including Marek Lowther – our contracts guys are trying to contact the people they dealt with to see if they can get some feedback. I’ve heard they put out an announcement yesterday but haven’t seen it and that there would be no further communication before 28th Feb… !”
Signor Caio’s appointment in 2003 had raised hopes that the UK business would be turned around. However The Times has reported that one major shareholder, who declined to be named, said yesterday the UK business appeared “more of a liability than an asset”.
C&W’s warning, that earnings before interest, taxes, depreciation and amortisation (ebitda) at the UK business would be flat year on year in 2006-07, sent shares in C&W tumbling to a near 16-month low, before they closed down 12¼p at 102¼p.
Speaking yesterday Richard Lapthorne, Group Chairman, said: “Today’s reorganisation marks a significant step in the development of Cable & Wireless. The creation of the two operating units is the result of a huge amount of effort by the team and, in particular Francesco, who has worked closely with me to get us to this point. We have put in place the tools for the strategic repositioning of the UK business, though the short term environment remains extremely challenging. We are focused on operational delivery in all of our markets.”
Francesco Caio, Group Chief Executive, said: “Over the last three years we have transformed Cable & Wireless from an unfocused business into a group of telecom operators relevant in each of their markets. This has been achieved against a background of unprecedented change in the industry. We exited unsustainable markets including the US and Japan and we have rebalanced the revenue mix in the National Telcos towards the growth areas of broadband and mobile.
“In the UK, we have devised and started to implement the strategy for long term success through scale, access and IP capability. Notwithstanding the continued pressures, particularly in the legacy voice market, the robust performance of the former Energis business together with promising progress that is being made with Bulldog means that we continue to have confidence in the medium-term financial objectives for the UK business announced last November.
“These moves over the last three years, together with the calibre of leaders that we have attracted, create the right conditions for the reorganisation announced today and enable the company to progress into what I regard as the next natural phase of its development.”
Changes to Group Structure
The Group will divide its business into two operationally self-contained businesses, UK (including Bulldog) and International. This decision reflects recognition of the differing characteristics of the UK and International businesses, the critical scale achieved in both, the quality of management leading both businesses and the move into a phase of execution against agreed business plans.
As a result, the central functions of Cable & Wireless will be reshaped to ensure the continuation of proper governance and control at the Group corporate centre but will no longer operate shared services for the two business units.
New Management Structure
Francesco Caio will continue as Group Chief Executive until the start of the new financial year after which he will work with Richard Lapthorne to ensure the successful transition of the organisation to the new structure. As part of this new structure in the UK, John Pluthero is appointed joint Group Managing Director and Chairman of the UK from the start of the new financial year, and Jim Marsh, Director of Retail, UK will assume the role of Chief Executive of the UK business. As a result of the decision to integrate Bulldog into the UK business, both Emanuele Angelidis, Chief Executive Bulldog, and Jim Marsh will report to John Pluthero.
In International, Harris Jones is appointed joint Group Managing Director and Chief Executive of International, again with effect from the start of the new financial year, and Lord Robertson of Port Ellen will become non-executive Chairman of International whilst remaining a Deputy Chairman of the Group. Both Harris Jones and John Pluthero will report directly to the Group Chairman, Richard Lapthorne.