In the wake of its apparently failed negotiations with AT&T Co, Cable & Wireless Plc is scaling back its ambitions, and has agreed with US West Inc to merge its Mercury Personal Communications with the Unitel consortium in which US West has bought out the other investors – but makes it clear that the present […]
In the wake of its apparently failed negotiations with AT&T Co, Cable & Wireless Plc is scaling back its ambitions, and has agreed with US West Inc to merge its Mercury Personal Communications with the Unitel consortium in which US West has bought out the other investors – but makes it clear that the present 50-50 shareholding in the combined company may not endure. Cable & Wireless is also reorganising its business services operations to concentrate on markets where it is strong. The two Personal Communications Network franchise holders had already agreed to cut costs by sharing a single network – but had said that they would compete in the market. The fact that the number of franchise holders falls to two from the three licensed by the UK Department of Trade & Industry the third is the former Microtel, now owned by Hutchison Telecommunications Ltd – means that a new third licence may be offered. GEC Plc was the most disappointed contender last time around. In the past week, US West took the right to obtain full ownership of Unitel, in which Thorn-EMI Plc and Northern Telecom Ltd had previously been shareholders. This arrangement will be effective on completion of the merger agreement. The new venture, to be called Mercury Personal Communications Ltd, expects to offer initial service by mid-1993. US West is a major investor in cable television franchises in the UK and the partners envisage combining the 1.8GHz Personal Communications technology with cable to use radio to deliver phone service to homes and small businesses that don’t want cable or are out of reach – using radio for the last mile to the home as Cable’s Lord Young put it. Under the reorganisation, Cable & Wireless seems to have scaled down its Digital Global Highway ambitions: it is merging its units that provide services for business customers into a single organisation called Cable & Wireless Business Network, taking in Worldwide Services and International Data Network Services. It will concentrate on markets in Asia, Europe and North America where it already has a strong presence, and will not continue to participate in the building of telecommunications networks in areas – presumably such as the former Soviet Union – where it is not already present. It does intend to build a portfolio of mobile communications businesses so the suggestion that the shareholding in Mercury Personal Communications is not fixed implies that any other partners will have to bring some thing big to the party. Cable & Wireless says that the merger will save UKP175m in capital and operating expenses next year, but the reorganisation will mean a charge of UKP50m for the fiscal year to this month.