Cable & Wireless will next week launch its pan-European network alone, abandoning its former partner Telecom Italia, which is embroiled in internal problems.
Analysts said the collapse of talks with the former Italian monopoly telco came as no surprise, following a string of failed partnerships with AT&T, Unisource and IBM, and the resignation last week of Telecom Italia's chief executive, Gian Mario Rossignolo.
"With the change of leadership at Telecom Italia, there is an element of uncertainty with regard to their future plans," said Cable & Wireless spokesman Peter Eustace.
Cable & Wireless will launch a network linking cities across Europe alone next week, without any other partner, said Eustace. However, the company said it wouldn't rule out further cooperation with Telecom Italia in the future.
When the operators announced their alliance in April, the UK carrier's chief executive, Richard Brown, described Telecom Italia as its "anchor partner" in Europe.
European expansion has been high on Cable & Wireless' agenda in the past few months, with major advertising campaigns running in the continental European press. But analysts said the company will need to become more aggressive to succeed alone.
"Cable & Wireless has to accept that the rules of the game have changed. The name of the game is to get aggressive," said Chris Lewis, an analyst at the Yankee Group Europe in Watford. "Cable & Wireless do have a presence [in continental Europe], they just don't let anyone know about it."
Telecom Italia has got bogged down in internal politics, according to Lewis. "They haven't been able to sort out a relationship with anyone. They need someone to take the bull by the horns," he said.
Rossignolo resigned last month after coming under fire for making a number of public relations blunders during his 10 months in office. Last month, for example, he first denied, then confirmed a forecast decline in profit for 1999.
Cable & Wireless is better off without Telecom Italia, according to David Brown, director of telecomms consultancy Schema Consulting. "At the moment it is a question of speed and clarity of message. They will do better on their own than by trying to achieve consensus on everything," he said.
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