When Cable &Wireless (C&W), the telecommunications and data services provider, announced plans in December to put most of its US assets into Chapter 11 bankruptcy protection, few were surprised. After all, C&W was widely known to have run out of ideas – and patience – for dealing with a string of dot-com-era data services acquisitions.
Wisely, C&W’s customers had been briefed well in advance. CEO Francesco Caio devised the Chapter 11 plan, and the escape route for customers, shortly after he took over in April 2003,
figuring it was the only way to extract the company from its North American mess.
First, he began leasing bandwidth from alternative providers in North America. Plunging bandwidth prices meant that this ‘virtual’ network could be put together and operated more cheaply than C&W’s physical network, which was destined for Chapter 11.
Then, C&W briefed its UK and global customers about its plan and, from October 2003, quietly started transferring them to the virtual network. “They were quite relaxed about it,” says Duncan Black, C&W’s director of corporate solutions strategy. Few clients were lost as a result, he claims.
Customers in the US with no overseas operations were left behind with C&W America. That unit, which C&W put into administration, now seems destined to be bought by investment firm Gores Technology for ‘only’ $125 million.
Meta Group analyst Stan Lepeak says that even US customers left with C&W America should not be too concerned. The pre-packaged nature of C&W America’s administration order, with a buyer already lined up to take over at the end of March 2004, gives them the best chance of a smooth transition, he says.
If it goes according to plan – and it remains a big ‘if’ for now – C&W’s strategy could prove a blueprint for other data services companies that run into difficulties. Despite all the trouble at C&W and others, everyone in the industry knows there is still much more to come.