pounds 270,000 in perks for chief of new C&W group

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The Independent Online
Graham Wallace, chief executive of Cable & Wireless's proposed new pounds 5bn cable group, was given a pounds 100,000 "golden hello" on joining the company and will receive a pounds 170,000 bonus this year in addition to his basic salary, documents issued to shareholders disclosed yesterday.

The offer documents for Cable & Wireless Communications (CWC) also reveal that the complex process of merging C&W's Mercury subsidiary with three cable operators will cost almost pounds 35m in fees, mostly paid to City lawyers and advisers.

Mr Wallace was poached by CWC in February from his post as head of Granada's restaurants and motorway services business.

The golden hello and bonus come on top of his basic salary of pounds 375,000, bringing his total pay this year at CWC to pounds 645,000, double his pounds 320,000 basic salary at Granada. He will also be entitled to a pension of two- thirds of his final salary.

The disclosures came as Dick Brown, chief executive of the C&W parent group, confirmed CWC was on the hunt to buy other cable companies, though he added no deals would be done until shares in the new venture were listed on the London and New York stock markets at the end of April. "The door is open," Mr Brown said.

His comments will raise speculation that CWC will fight TeleWest, the other leading cable group, to mop up the remaining independent middle- ranking cable operators such as General Cable.

CWC also announced plans to invest pounds 290m over the next two years on launching a digital pay-television service, of which pounds 180m will go on providing set-top boxes which can decode programme signals. A further pounds 1.35bn is to be spent on extending the cable network to homes.

So far 3 million households have been passed by CWC cables, with commitments to extend this to 6 million by 2001. The new group will invest a further pounds 430m in connecting business customers to the Mercury long-distance phone network.

Mr Brown promised that CWC would overcome the marketing weaknesses that have dogged many cable operators.

"Cable & Wireless Communications is a powerful new force. We will be customer-led; we will be marketing-driven."

So far only 9 per cent of potential customers have signed up for the television service, and 22 per cent for the telephony offering. The biggest change will come this autumn, when the four brands, Mercury, Bell Cablemedia, Nynex CableComms and Videotron, are replaced by the Cable & Wireless name.

There was no further news on job cuts, though Mr Brown made clear that merging four companies meant substantial and "aggressive" cost savings. The seven customer service centres are likely to drop to between two and four, while some of the four network operations centres will also close.

It is thought this will mean at least 1,000 job cuts out of the combined workforce of 12,500. CWC will also save pounds 100m over two years by offsetting Mercury's tax bill with the accumulated losses of the cable companies.

CWC revealed pro forma pre-tax profits of pounds 93m in the nine months to the end of December on turnover of pounds 1.5bn, up from pounds 46m in the year to the end of March. Analysts have valued the business at pounds 4bn-pounds 5.5bn.

How the fees add up


SEC filing 500,000

NYSE 139,800

London Stock Exchange 162,000

Panel 150,000

Dealer managers/ financial advisers 17,983,000

Information agent/US exchange agent/UK receiving agent 29,000

Legal 10,463,000

Accounting 3,433,000

Printing & mailing 1,100,000

Miscellaneous 804,000

Total 34,673,800