C&W invests £190m to upgrade its network

Cable & Wireless has announced its first major upgrade to its core telecoms network since the group was nearly brought to its knees in the technology crash after a series of disastrous US acquisitions.

Cable & Wireless has announced its first major upgrade to its core telecoms network since the group was nearly brought to its knees in the technology crash after a series of disastrous US acquisitions.

C&W announced yesterday it was investing £190m in its network, scrapping old-fashioned call-switching technology for new software-based switches to create a new core network based on internet technology.

The company drafted in a new management team two years ago under the chairmanship of Richard Lapthorne to save the business, which has involved exiting the US, settling a £1.5bn tax bill with the Inland Revenue and restructuring its operations.

It has switched £155m of capital expenditure from its old network to building its new network and has earmarked an additional £35m for the scheme.

A review of its network and operating costs has also identified savings of £50m in 2005-06, while its efforts to grow in broadband internet connections through its Bulldog brand is ahead of schedule, the company said yesterday.

Francesco Caio, C&W's chief executive, said: "After a period of intense focus on fixing the legacy issues, we are now moving our attention to building our competitive position in the UK. The migration to next generation networks will be a catalyst to change the dynamics of the UK telecoms market."

By lowering its cost base, C&W said it would be better able to meet the challenge of continued pricing pressure in the UK telecoms market which has seen a vicious price war erupt between C&W and rivals such as Thus.

"We believe pressure on pricing is likely to continue, particularly for traditional services, and that by lowering the cost base in this way, this programme will substantially strengthen the company's ability to manage the effect of these price movements," the company said. In September C&W announced an £85m capital expenditure programme for Bulldog to invest in local loop unbundling that gives the company access to exchanges owned and run by BT.