C&W to roll out Europe expansion
Thursday 12 November 1998
Dick Brown, chief executive, said C&W had decided to roll out a European network by itself rather than seek another strategic telecoms partner, although co-operation with Telecom Italia was still possible in the long term.
The springboard for the group's expansion into Europe will be Cable & Wireless Communications (CWC), which already has a basic low-speed data network in place, originally installed by Mercury Communications.
Mr Brown provided few details of the European strategy ahead of next week's announcement. But he said: "The idea will be to grow rapidly from a small base. Europe is the second-biggest market in the world, so you have got to be there."
He was speaking as C&W reported a 10 per cent rise in interim profits to pounds 878m before tax and exceptional items, and disclosed that its jointly- owned mobile telephony business, One2One, had made a profit for the first time before interest, tax and depreciation.
C&W revenues in Europe last year came in at pounds 170m compared with group sales of pounds 8.3bn. Analysts speculated that C&W would install voice switches in the big European markets and then upgrade its data switches before linking them all together by buying capacity from existing network operators such as Hermes or Viatel.
C&W will primarily target business customers across Europe. This opens up the possibility of the company installing fibre links in major business centres such as Frankfurt, Paris and Milan to connect up corporate clients, although this would require very large investment.
Mr Brown said that C&W was not seeking to link up with a global telecoms partner or to forge a major alliance with a US operator. He said it made more sense for shareholders to develop the business independently.
The main vehicle for transatlantic expansion by the group will be the former MCI Internet business that C&W bought this year for pounds 1bn.
The Internet market is growing at 50 per cent a year and C&W has already cross-sold long-distance telecoms services to 13,000 new Internet customers, the company announced yesterday.
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