CWC to push ahead with pounds 1bn investment programme

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The Independent Online
Cable & Wireless Communications, the UK's largest cable group, is to push ahead with a pounds 1bn annual investment programme despite recent spending cuts elsewhere in the industry, and concerns over falls in the company's share price.

The pledge from Graham Wallace, chief executive, came yesterday as CWC revealed the first details of the group's pounds 50m advertising campaign to replace four separate brands with a single identity. The relaunch, using the name of Cable & Wireless, which is CWC's controlling shareholder, is the biggest test yet of the group's bid to provide the most effective competition to British Telecom and British Sky Broadcasting.

In a quietly conducted operation over the past week the original brands of the four companies which formed CWC, Mercury, Bell Cablemedia, Nynex CableComms and Videotron, all disappeared. Bizarrely, in the weeks preceding the rebranding CWC had invested heavily in promoting Mercury's telephone services to bring in additional revenues.

"It was a conundrum. We couldn't drop the Mercury name until we launched the new one," said Mr Wallace.

From Monday the first phase of CWC's advertising campaign will try to build awareness of the new brand among consumers, with heavy promotion on prime-time television. Mr Wallace said the company had learnt from the cable industry's disastrous pounds 12m joint campaign last year featuring Dawn French, the comedienne.

"The problem with campaigns like that is that people don't remember cable, they remember Dawn French," Mr Wallace explained. Instead CWC's four TV adverts will use unknown actors, all on the theme of getting to know each other.

CWC hopes the relaunch will enable the company to start with a clean slate, leaving behind the long-standing complaints about customer service in the cable industry. But the rebranding exercise is also a gamble, carrying the risk of customer confusion. For Mr Wallace the past few months have been nerve-wracking. He watched the company's share price, floated at 300p in April, drift steadily downwards. It closed yesterday at 253.5p, up 1p.

Telewest, the second largest cable group, recently slashed its investment spending and announced 1,400 job cuts. The news fuelled concerns that cable operators have mostly failed to make dramatic inroads into BT's residential customer base.

Mr Wallace admitted to frustration at CWC's share price performance, but pointed out that the three cable companies made up only a fraction of the group's sales. Mercury accounts for the bulk of the turnover.

He dismissed suggestions that CWC would follow Telewest by delaying its investment programme.

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