C and W shelves alliance with Telecom Italia

The seven-month alliance between Cable and Wireless and Telecom Italia has been abandoned

The seven-month alliance between Cable and Wireless and Telecom Italia has been abandoned. It would have led to the creation of the world's second largest carrier of international telecommunications traffic.

Mr Richard Brown, C&W chief executive, said yesterday that the company would next week unveil details of its plans for the European market, but made it clear there would be no role for the Italian company in its strategy.

People close to Telecom Italia said C&W's decision came as no surprise. The deal had depended on a personal understanding between Mr Brown and Mr Gian Mario Rossignolo, Telecom Italia's controversial former president, who resigned three weeks ago after just 10 months in office.

After the departure of Mr Rossignolo, most observers thought the alliance had little future. Talks between the two operators, which would have led to co-operation in the provision of services to multinational customers, were suspended. The sale of C&W's stake in Bouygues Telecom to Telecom Italia and a group of other investors in the French mobile operator is expected to be concluded.

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C&W, which currently employs 200 people in Ireland and unveiled plans in September for a £50 million investment which will create 300 more, yesterday announced results for the six months to September 30th. Pre-tax profits before tax and exceptional items came in 10 per cent ahead at £878 million compared with £797 million last time. A dividend of 4.1p will be paid, 9 per cent ahead of last year's 3.765p.

C&W's plans for expansion in Europe were outlined earlier in the year. It has been securing licences and installing switches in a number of mainland business centres.