C&W split under scrutiny as international boss goes

Cable & Wireless pushed out the chief executive of its international division yesterday, rekindling speculation about the viability of the group's strategy that split the company into two divisions run by dual chief executives.

Harris Jones, chief executive of international, stepped down with immediate effect, the company announced, without giving any explanation for his departure. His exit coincided with the revelation of disappointing numbers from the business he ran, representing a dark spot in an otherwise forecast-beating set of results.

The development means that, for now at least, John Pluthero, the hard-charging chief executive of the company's domestic unit, will take control of the whole group, adding the role of executive chairman of international while the company looks for a permanent replacement.

Mr Pluthero, famous for having told his employees in an internal memo that they worked in a "crappy industry" and warning them that the company was "no longer a place for the timid", is credited with whipping C&W's once-struggling domestic unit into shape.

Indeed, while C&W's International business yesterday reduced guidance for full-year revenue by $20m (£9.6m) to $820m and reported a 3 per cent drop in earnings before expenses to £200m, Mr Pluthero's oddly-renamed "Europe, Asia and US" unit reported a quadrupling of earnings to £99m and a £35m increase in full-year revenue forecasts to up to £215m. Richard Lapthorne, chairman of Cable & Wireless, said: "We are now at the stage where we need to accelerate the transformation of service and brand reputation, fuelling further growth in the value of International."

Mr Jones is in line for an estimated £5m in cash and shares, a gilded goodbye that is likely to raise the ire of some shareholders who objected to the company's move this summer to remove the £20m caps that had been in place on bonuses payable to Mr Harris and Mr Pluthero. The limits were removed under the group's effort to incentivise management as the group pushes ahead with a revitalising of the business.

C&W is understood to be keen to find a replacement for Mr Harris as soon as possible. One of the possibilities is that Mr Pluthero could run both businesses full time.

That would represent a backslide from the company's unusual decision 18 months ago to split the company into two divisions, each with its own chief executive. Mr Jones controlled the international operations, which focus on the retail markets for mobile and fixed-line services, while Mr Pluthero is responsible for the largely wholesale domestic business. Since the split, speculation has been rife about whether the company would go ahead with a complete demerger, given the different nature of the two units. The company said yesterday that it currently had no such plans, though it continues to examine the best way to drive the business forward.