Users told to keep an eye on headless C&W

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Users told to keep an eye on headless C&W

Analysts have advised users to keep a sharp eye on developments at Cable & Wireless, after the troubled telco's chief executive, Graham Wallace, gave in to calls for his resignation last week.

Julian Hewett, an analyst with Ovum, advised customers to keep a watching brief while the company is effectively without a chief executive, and to ensure they have second sources of telephony lined up.

Wallace's tenure as chief executive saw C&W's shares reduced to junk bond status, following the news late last year that the company had been forced to set aside £1.5bn because of an undisclosed agreement with Deutsche Telekom.

However, he is reported to be likely to receive a pay-off of up to £2m.

The resignation came 10 days after the arrival of new chairman Richard Lapthorne, and saw an immediate effect on C&W's share price, which rose 7% after the news.

Hewett said, "Obviously the company is in turmoil, without a CEO, and having a completely new chairman. Its prospects are difficult to comment on - it has been bad enough trying to understand what happened in the past with C&W, never mind trying to look into its future.

"There are two things we can see clearly though. Firstly, it will be a while before any major decisions are made as the new CEO will need ownership of those. Secondly, financially speaking, despite the £1.5bn hit taken recently, it does have money in the bank.

"Obviously, customers should line up alternative telecoms sourcing but most of them will be getting good at that by now after the troubles which afflicted the sector over the past year."

Despite its woes, C&W is picking up business. Last week Lothian NHS Board signed a £12m, five-year contract with C&W for the provision of a managed voice network linking 38 sites and 11,000 users. The contract term will see 23 new sites added to the existing network and preparation being made to migrate the NHS board to voice over IP services.

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