Shares in Cable & Wireless fell over 4 per cent yesterday following news that Britain's second-biggest telecoms company had lost its respected chief executive, Mr Dick Brown.

US computer services giant Electronic Data Systems said it had secured Mr Brown's services as its new chairman and chief executive from January 15th, ending the 51-year-old American's eventful, two-and-a-half year reign at Cable & Wireless.

Mr Brown was credited with turning a floundering telecoms empire into a potential world force in the fast-converging communications, information and entertainment industries, and investors feared his exit raised questions over the strategic direction of the British group.

The decision sent Cable & Wireless's shares dropping to end 4.1 per cent lower at 695p. But some analysts said the stock would have fallen further had the market not started to speculate that Mr Brown's departure might flush out a takeover bid.

"In isolation, if Dick Brown resigned today, I would have expected the shares to be off 10 per cent or more," said one leading telecoms analyst, who declined to be named.

"I think the market is saying `OK, he's gone, but this may actually predicate a bid sooner rather than later', " he added.

Cable & Wireless, which has a substantial operation in the Republic, named deputy chief executive Mr Rod Olsen (53) as acting chief executive and said it would set up a committee under chairman Mr Ralph Robins to appoint a replacement as soon as possible. Mr Robins insisted the company had a strong team in place and the future direction of the company was set.

Mr Brown leaves Cable & Wireless poised to enter Europe in a five-year, $1 billion (£666 million) investment drive to build a fully integrated voice, data and Internet network across the continent.

The initiative was announced in November, just four months after Mr Brown turned the 125-year-old group into a major US Internet player with a $1.75 billion acquisition of MCI Communications' Internet business.