Kingston boss in shock resignation

Kingston favours white telephone boxes

Shares in alternative telecoms carrier Kingston Communications have slumped following the surprise resignation of long-standing chief executive Steve Maine.

The Hull-based company said on Wednesday that Mr Maine had stepped down, and would be replaced on an interim basis by chief financial officer Malcolm Fallen.

"We are grateful for the contribution Steve Maine has made to the development of the group, and we wish him well for the future," said Kingston chairman Michael Abrahams.

News of Mr Maine's departure came as a surprise to City investors, who marked Kingston shares down by 8% to 61.75p shortly after the announcement.

Mr Maine has held the top job at Kingston for more than five years, presiding over the company's high-profile stock market debut in 1999.

Resigning matter

Kingston announced Mr Maine's resignation as it issued a downbeat progress report on its "Inbusiness" division, which supplies telecoms services to corporate customers across the UK.

The company said growth in revenues from the service would be "considerably lower" than originally expected despite new contracts with Liverpool's John Lennon airport, Sheffield City Council, and toymaker Lego.

City sources told BBC News Online that Mr Maine had staked his credibility on the success of the Inbusiness division, and that the unit's failure to hit its targets despite two restructuring exercises had precipitated his resignation.

But they welcomed the appointment of Mr Fallen, who has served as Kingston's chief financial officer since January 2001, saying he would ensure "continuity" at the group.

Kingston Communication's core business is the telephone network in Hull, east Yorkshire - the UK's only independently owned regional telephone system.

Competitive squeeze

The city's telephone network was left out of a merger between the UK's other local exchanges in 1911, a tie-up which eventually created British Telecom.

The business prospered under the ownership of Hull City Council during the last century, investing heavily in new technology, and underlining its independence from BT by introducing distinctive white public telephone boxes in its home town.

Kingston shares soared to a high of over £15 shortly after its flotation, briefly propelling the company into the elite ranks of the FTSE 100.

But the company's shares fell back to earth as the late 1990s telecoms bubble began to deflate.

Kingston's overall performance has also been hit hard by stiff competition from bigger players such as BT and Cable & Wireless in the markets served by its newer divisions.

These include Inbusiness and directory enquiry service Kingston Information.

Kingston Communications made an operating loss of £20m in the 12 months to March 2003, down from £37m one year earlier.