The wheels on the bus seems to have stopped altogether as against a background of falling margins, increased competition and an unsupportable cost structure telecoms group Cable & Wireless has dealt a fresh blow to staff by warning it could halve its UK workforce over the next five years.
The group, which acquired Energis last year, said it envisaged its current headcount of 5,500 would fall to between 2,500 and 3,500 over the next four to five years. It added that 350 jobs would be lost in the current financial year.
C&W said the changes reflected plans to concentrate on fewer and larger corporate customers, while reducing the complexity in its products and systems.
The group employs around 2,000 staff in Bracknell, with other workers in Leeds, Manchester, Reading and London.
C&W made the announcement ahead of a strategy briefing for analysts and investors in Reading. As part of the reshaping of its UK business, the company said it planned to reduce its UK customer base from around 30,000 customers to about 3,000 larger corporate customers and public institutions.
The company also said the cost savings expected from the merger of Cable & Wireless UK and Energis were likely to be greater than £40 million expected by the end of March 2006.
The statement comes two days after plans for job cuts were revealed in a leaked memo from John Pluthero, the newly appointed head of the UK business. Mr Pluthero reportedly said: “If you are worried that it all sounds very hard, it’s time for you to step off the bus. This is no longer a place for the timid. People are going to say it can’t be done. Many of us are going to hit the steepest learning curves of our lives.”
Cable & Wireless has however confirmed its commitment to Next Generation Network (NGN), which is viewed as an important element of the turnaround strategy and is indeed already in progress with over £50 million of capital expenditure in 2005/06. The Company will stress the importance of LLU as a strategic asset in the context of NGN, delivering IP to its target customers. However, the pace of change for NGN will be driven by customer demand and dual networks will be needed in the medium term.
C&W shocked the market last month by ruling out growth in its ailing UK business until 2008 at the earliest after being caught in a fierce price war in the communications and internet markets.