Cable and Wireless To Restructure; Plans To Close 19 Data Centers

The carrier, which has steadily been pulling back U.S. efforts, may withdraw from domestic business markets in the United States and continental Europe. The company would still support multinational enterprise and service provider customers in these markets.

Japan and U.K. businesses may also be restructured to reduce costs.

Cable and Wireless is moving ahead with a plan to close 19 of its 42 data centers over the next 12 months and is discontinuing some noncore product and service lines. These products and services were not named.

In February 2002, Cable and Wireless and its Digital Island subsidiary completed the acquisition of hosting provider Exodus Communications in a deal valued at $750 million.

The acquisition, which includes 26 data centers and substantially all of Exodus' U.S. customer contracts, was approved Jan. 17 by the U.S. Bankruptcy court.

The restructuring effort will result in the layoff of 3,500 of its 12,500 global data services unit employees and save the company about $634.7 million in operating costs annually, according to the company.

"The scale of the restructuring we are undertaking represents a major challenge, particularly given the current market turmoil. Implementation will be demanding," said David Nash, Cable and Wireless chairman, in a statement. "However, the board believes this approach represents the best available option for [Cable and Wireless' future by focusing on businesses with potential for growth whilst preserving cash by minimizing exit costs and operating cash outflows."