United Utilities signalled yesterday that Your Communications, the telecoms business it built from scratch, will miss its target for profitability early next year.
The news came as United said it was shedding 70 jobs at the division – 10 per cent of the workforce – and taking a restructuring charge of £3m.
In a trading update, the company said Your Communications has largely completed its network building phase, having established local telecoms systems in the group's North-west England heartland. The 70 jobs are mainly in engineering, and the company is negotiating voluntary redundancies and the transfer of some employees to other areas of the group.
The United finance director, Simon Batey, said the company was abandoning previous guidance that Your Communications would be generating positive monthly earnings, before interest and tax, by the end of its financial year in March 2003. "We will miss it, but probably not by much. Now we are saying we will be profitable in the first half [of the new financial year]," Mr Batey said.
"There has been a general slowdown in revenue growth across the industry, but relatively we are doing okay. Other regional network gets to parts that other city-to-city or international networks don't reach, where usually our only competitor is BT."
United has invested £250m in building the Your Communications business and once hoped to float the division. Now the group says it will "consider its options" once Your Communications reaches break even.
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