CABLE & Wireless yesterday began a massive restructuring programme that will see it pull out of the US and lose 1,500 jobs in the UK as it reported losses had widened to a record pounds 6.4bn.
Furthermore, dividend payments are being suspended for a year to help the company save money that will pay for the whole exercise - something analysts reckon could cost pounds 700m.
The company's new management are dismantling the entire strategy put in place by former chief executive Graham Wallace - a strategy in which the company invested about pounds 9bn in the US alone.
Sketching out a three-year turnaround plan, new chief executive Francesco Caio conceded there was a "long and risky" journey to travel. He is confident, however, that Cable & Wireless has a long- term future.
Under Mr Wallace's stewardship, Cable & Wireless issued four profit warnings as trading deteriorated. It also admitted to a potential pounds 1.5bn tax liability which only came to light after a credit ratings downgrade.
In a bid to start afresh and put the past behind it, the new team is intent on changing just about everything at the business from the way it is structured, right down to the kind of profit and loss numbers it uses when reporting its figures.
It is abandoning its old `regional' and `global' reporting divisions in favour of looking at the business on a country by country basis and will also stop referring to EBITDA, or earnings before interest, tax, depreciation and amortisation - a measure chairman Richard Lapthorne described as "seriously dangerous" yesterday.
In the year to 31 March, Cable & Wireless reported a pretax loss of pounds 6.4bn after exceptional charges compared with a loss of pounds 4.5bn a year before. But on an underlying, or Ebitda, basis, the company turned out a profit of pounds 334m.
Shares in Cable & Wireless reversed early losses to close up nearly 7 per cent at 103.5p - the second biggest riser in the FTSE 100 index - as the City took a more positive view on the company's future prospects.
However, the road to recovery will not be an easy path to tread. Mr Caio painted a depressing trading picture yesterday of flat to declining overall demand and said overcapacity was here to stay while pointing out that almost all the profit in fixed telecoms networks was in the local loop.
With that in mind, he says Cable & Wireless will focus on where it thinks it has a decent chance - offering core telecoms services in the UK - where it is the number two after BT -- and other markets where it has a decent position.
Given Cable & Wireless' weak performance in the UK, it is hardly surprising to see it taking the axe to costs. Sales fell 16 per cent in the year to pounds 1.7bn while staff costs fell just two per cent. Worse still, the UK made an operating loss of pounds 303m.
Consequently, Mr Caio has decided around 1,500 jobs will go in the UK over the next two years out of its 5,500 strong domestic workforce. The cuts are on top of the 3,500 job losses it announced last November.
The new strategy also means it is curtains for the US business. C&W has invested about pounds 9bn in the US including the acquisition of MCI in 1998 and, more recently under Mr Wallace's stewardship, the purchases of web hosting firms Digital Island and Exodus.
Yet, of the pounds 2.9bn of revenues it gets from what it currently calls `Global', only seven per cent are truly the type …