C&W faces more changes at the top

Cable & Wireless was plunged into further controversy yesterday as new changes emerged at senior management level only a day after the sudden resignation of Duncan Lewis, the chief executive of its Mercury Communications arm.

There was speculation in the City that Mr Lewis's departure was a side- effect of a power struggle within the group which could ultimately lead to the downfall of C&W chairman, Lord Young.

C&W said yesterday that Rod Olsen, finance director, was to acquire a much more powerful role, taking on significant day-to-day responsibility from James Ross, chief executive. Mr Olsen will become chairman of the "operational management team". Mr Ross in turn has been appointed deputy chairman in addition to his existing post. One view in the industry is that Mr Ross is positioning himself to take the reins from Lord Young.

Mr Lewis is the fourth head of Mercury to leave over the last six years and some City analysts have criticised Lord Young for failing to get a stable management in place at the subsidiary.

Mr Lewis, brought in last November to transform Mercury's fortunes, is believed to have been offered a seat on the C&W board but to have had misgivings about the level of freedom he would be given in future to take Mercury to the next phase of its development.

Cable & Wireless will say only that Mr Lewis left for "personal reasons". Because he was not on the main board of C&W, the group said that the terms of his employment and any severance agreement were confidential. It is thought that Mr Lewis left without any immediate alternative employment in mind.

The changes at C&W sent shock waves througout the industry. Mr Lewis was credited with having done a good job of refocusing Mercury and cutting costs. As recently as Monday he launched a vigorous attack on Government policy, calling for action to promote effective competition for BT. City analysts have been struggling to interpret his abrupt departure and its wider implications for Mercury and the entire C&W empire.

Mr Lewis is to be replaced by Peter Howell-Jones, deputy chief executive of the group's flagship, Hong Kong Telecom, who has been with C&W for more than 30 years.

Shares in C&W fell by 3p to 421p in a rising market - in spite of speculation over a possible takeover of Mercury or the group as a whole. City analysts have talked about many potential suitors including Deutsche Telekom, AT&T, Nynex and US West, already C&W's joint venture partner in the mobile telephony operation, Mercury One2One.