Bulldog, the struggling consumer broadband unit of Cable & Wireless Plc, has announced that it will stop actively selling broadband connections to small business and residential customers, at a cost of around 150 jobs.
C&W revealed the decision in a filing to the London Stock Exchange. Its revised strategy meant that C&W would cease any further proactive sales, marketing or advertising activities to acquire new residential and small business customers. Instead, Bulldog will concentrate on providing wholesale services to other internet service providers (ISPs) and retail services to large corporate customers.
The decision is a u-turn for UK managing director, John Pluthero, who in February warned C&W staff in a widely leaked memo that this is no longer a place for the timid and said those worried about the changes should step off the bus. Days later, Pluthero announced a radical restructuring at the troubled telecoms group to split the business into two operational units, namely UK (including Bulldog) and International. He also announced that UK headcount would fall from more than 5,500 to somewhere between 2,500 and 3,500 over the next four to five years.
However the biggest surprise was the news that he would reduce C&W’s UK customer base by around 90% as the company looked to concentrate on fewer, larger customers. This meant reducing C&W’s customer base from 30,000 to about 3,000 large corporate customers and public institutions.
At the same time Pluthero said Bulldog would remain part of the UK group, quashing rumors of a sell-off. He said in February that he was really happy with Bulldog’s performance, which had managed to grow its customer base to 118,000 (by end of March this year), although it faced a probe by the UK regulator Ofcom following hundreds of complaints from customers, which meant that Bulldog’s heavy investment in local loop unbundling took a back seat for a few months.
This commitment to Bulldog was significant because up until then there had been speculation that C&W would ditch the ISP and focus instead on the provision of wholesale broadband only. Pluthero admitted the temptation to turn Bulldog into a wholesale LLU provider. There was a queue around the block, he said in February, made up of ISPs keen for such a product. I could do it tomorrow for a dozen customers, he said, but it’s not that attractive.
Now it seems that Pluthero has changed his mind. We believe that a wholesale approach to the consumer and SME market is the best way to optimize our return from our local loop network capacity, he said on Thursday.
The London, UK-based group remains committed to its Next Generation Network (NGN), and has unbundled 411 telephone exchanges (at the end of March), and is still on target to have 800 fully unbundled exchanges by September this year.
C&W said consumers and SMEs can still sign up to Bulldog online, but telephone signups will cease immediately. All advertising will also cease, including its television adverts.
It has been a torrid time for the carrier whose global empire once spanned Europe, Hong Kong, and the US. In January, it issued its second profit warning in four months, and also announced the departure of chief executive Francesco Caio and CFO Charles Herlinger.
Pluthero is the former chief executive of Energis, as well as the founder and former chief executive of internet portal Freeserve. He was placed in charge of C&W’s UK unit in January this year in an attempt to turn around the business, which has been badly hit by high levels of customer defections and the transfer from legacy services to IP. Pluthero had admitted earlier he was attempting one of the biggest business turnarounds attempted in British industry in the last 50 years.
C&W’s move comes amid a number of companies offering free broadband connections in the UK as part of a converged service offering to consumers and SMEs. Companies such as the Carphone Warehouse Plc, and mobile operator Orange have already unveiled their competitive offerings, with Vodafone Group Plc and UK satellite broadcaster British Sky Broadcasting Group Plc expected to follow suite in the next three months.
Shares in C&W rose 1.65% to 107.75 pence ($1.98) on the London Stock Exchange following the news.