Cable & Wireless Communications is considering splitting the company into two organisations, dismantling its original merger, PC Week has learned.
The UK's largest cable company has been railroaded into a restructure by Mediaone, which announced last week it had put its stake in One 2 One up for sale. CWC followed suit, adding its half of One 2 One to the deal.
"CWC has been backed into a corner on this one," said Neil Rickard, senior analyst at the Gartner Group. "One option would be to pursue Mediaone's stake in Telewest, CWC's main rival."
A city analyst close to the negotiations said the company is considering a more radical option.
"This involves splitting its business and consumer divisions in two, unpicking part of its original merger," he said. "The company is considering a merger with Telewest, keeping One 2 One and forming a new cable operation. We regard this as an outside chance, but Cable & Wireless is hinting at the possibility. However, to go back and undo the merger in this way does present a major credibility problem."
A source inside the business markets division at CWC said: "We have plenty of experience bolting together different networks, we know what the problems are and in fact we are still trading as four separate legal entities, so reverting back to the separate organisations would not cause any technical problems."
Neil Rickard, senior analyst at Gartner, believes that splitting the company into business and consumer organisations would benefit users.
"Group selling of all services: fixed, cellular, local access, cable modems, digital TV services and so on would be very good news for users as you have one company providing you with everything," he noted. "Also we might finally see some competition to BT."
For more stories see 30 March issue of PC Week UK
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