Cable and Wireless – Can it Get Worse? 29/03/11
Posted by Birchills Telecom on Tue, Mar 29, 2011 @ 02:28 PM
Cable and Wireless Worldwide (CWW) – the UK part of the old Cable and Wireless has had a torrid time of it since its split from the international part Cable and Wireless – now called Cable and Wireless Communications. We ask - can it get any worse?
How Did We Get Here?
Initially around 1900 Cable and Wireless had a proud history of supplying international communications including laying a lot of telegraph and deep sea cables. In 1947 the Labour government nationalised it and merged it with the Post Office. It continued to have an individual identity however, running a monopoly telephone service in some of the British colonies especially in the Caribbean. In 1981 the new Conservative government saw it as an easy privatisation candidate and formed it into a plc. With the later privatisation of British Telecom, Cable and Wireless became the only candidate to offer competition to the new British Telecom. They formed a company called Mercury who provided a similar range of services to British Telecom.
Mercury had no network of it’s own and used least cost routing to offer competition to British Telecom. They also took up a mobile licence and formed the mobile arm – which was called “One to One”. Eventually Mercury was merged with NTL and other cable companies and died as a brand – leaving behind some iconic phone boxes. Meanwhile "One to One” was sold and eventually became rebranded as T- Mobile – now Everything Everywhere.
As well as selling companies and making deals – Cable and Wireless acquired Energis – a company formed to take advantage of the electricity grid infrastructure to provide a communications network. It also acquired it’s chief exec John Pluthero in the same deal in 2005. The strategy became to become the biggest IP provider in the UK and a purchase of Thus and Bulldog followed. Thus was retired as a brand whilst the Bulldog brand was sold to Pipex.
A year ago the company split in two. The international business calling it called Cable and Wireless Communications and the UK business calling it Cable and Wireless Worldwide.
The UK business has a strategy to become the first choice communications integrator specialising in the mission critical needs of large users of telecoms.
So What’s Happened?
The UK government is a major purchaser of telecoms from CWW. The new Tory coalition government renegotiated the telecoms deal with CWW. This mean that CWW had to issue a profits warning and not only that it exposed the level of profits it was making from the HMG and large suppliers.
Since then there has been another profits warning which has seen the share tumble again. The Chief finance officer has resigned.
John Pluthero and Jim Marsh, the current CEO have shared £20m between them for their “success” in turning the company around. It’s a pity that the long suffering shareholders have seen the price plummet to 54p from the 92p at demerger. On Friday the 26th of March, Mr Pluthero leapt into the market to invest and spend a massive 54K in propping up his share price.
So if Mr Pluthero won’t invest more than petty cash (in his terms) what about the rest of us? There is a long standing aphorism regarding share purchase of shares as they fall, “don’t try and catch a falling knife” and I won’t be buying.
What’s Next
Clearly the situation with CWW cannot sustain. They either must buy something (Daisy – maybe) or be bought. If they buy something then given their track record it will probably be bad news but if they are bought the news for shareholders including Mr Pluthero may be good.
Either way – it looks like an interesting time. I for one will be watching keenly.
David Hill
Chairman Birchills Telecom
About Birchills Telecom
Birchills Telecom is the friendly independent supplier of choice of VoIP business phone systems. We supply ultracompetitive hosted VoIP systems to small business throughout the UK. Prices start as low as 24p per day per phone.