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 Tuesday, 21 January, 2003, 14:26 GMT
Cable & Wireless chief to leave
C&W chief executive Graham Wallace
Graham Wallace had been under pressure from investors
The struggling telecoms firm Cable & Wireless has said its chief executive Graham Wallace is to leave the company.

The firm said he would continue to be responsible for day-to-day operations until a successor was found, and would oversee the cost-cutting programme.

Mr Wallace had come under increasing pressure from investors after C&W issued four profit warnings in the space of two years.

It was inevitable

WestLB Panmure analyst John Tysoe

Shares in the embattled firm were up 3p, nearly 5%, at 64.75p in afternoon trade on Tuesday.

Mr Wallace's departure did not surprise analysts.

"It was inevitable, and really rather a shame that a brave attempt to redefine the company just did not work," said WestLB Panmure analyst John Tysoe.

"The market is taking a view that he was the architect of the Global strategy which has not worked and therefore he is going and as a result an alternative strategy is being put in place which may have a chance of succeeding."

C&W Global

Mr Wallace was the driving force behind loss-making C&W Global, the corporate telecoms and internet hosting arm of the company.

He sold off a number of C&W's businesses to provide the cash to expand the Global operation.

But there was so much competition that prices slumped although internet traffic boomed, eventually leading to rounds of job cuts around the world, including 4,000 in March 2001.

Under pressure

Mr Wallace's leadership of the firm had increasingly come into question as C&W was hit hard by the slowdown in demand for telecoms services.

Shares were trading at 800p when mr Wallace took the helm at the 131-year old firm in 1999.

C&W's shares lost 87% of their value last year, and in December the firm was relegated from the FTSE 100 index of leading UK shares.

The company announced a restructuring last year which would see it withdraw from much of the domestic business market in the US and continental Europe, but still provide a service for multinational companies.

In December its shares plummeted after it emerged that it had to secure 1.5bn ($2.4bn) to cover a tax liability from the sale of its stake in mobile operator One2One to Deutsche Telekom.

C&W also suffered a setback at its highly profitable regional arm when it turned out in December that its once-prized Caribbean telecoms operation was losing market share rapidly to a mobile operator in Jamaica.

Board reshuffle

Earlier this month C&W appointed Richard Lapthorne, the former chairman of healthcare firm Amersham, as its new chairman.

At the time of his appointment, analysts speculated that one of his first tasks would be to find a replacement for Mr Wallace.

As well as Mr Wallace's departure, Rob Rowley, a non-executive director and chairman of the audit committee, was named as executive deputy chairman.

For an interim period, Mr Rowley will also take responsibility for group finance director David Prince, who remains on the board and for legal director, Dan Fitz.

Mr Rowley will report directly Mr Lapthorne.

C&W also announced the appointment of two new non-executive directors - Tony Rice and Bernard Gray.

"These appointments will be invaluable in guiding Cable & Wireless through the many changes it will need to make over the coming months and years," said Mr Lapthorne.

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