C&W plans internet disposal

Cable & Wireless is considering a partial withdrawal from its UK telecoms heartland to bolster its dwindling cash reserves.

The company has told investment bankers that it is prepared to sell the UK business which provides phone and internet services to small and medium-sized companies.

Sources said that C&W considers the business, which bankers believe is worth up to £100m, to be non-core as the company is trying to focus on serving larger corporations.

The possible sale is chief executive Graham Wallace's latest attempt to get the company back on track after a disastrous expansion into loss-making internet services.

The revelation comes after a torrid week for C&W in which 47.9 per cent was wiped off the value of its shares. This was triggered by the disclosure, late on 6 December, that it may have to ring-fence £1.5bn as part of an historic liability. This is associated with the 1999 sale of its £3.4bn stake in mobile phone company One2One.

C&W revealed the liability after credit rating agency Moody's downgraded its debt two notches to junk status.

This has enraged shareholders, who want to know why C&W didn't reveal the liability sooner.

Some analysts now believe that the liquidity crunch at C&W means its £3.8bn cash mountain, often cited as its biggest asset, will be exhausted within a year.

This is piling the pressure on Mr Wallace to step down. C&W is hunting for a new chairman to replace Sir Ralph Robins, and it was assumed that after the changeover, the new chairman would search for a new chief executive.

But the drip-drip of bad news means that some shareholders now want a complete clearout of the board.