Wallace's big plans for C & W confound critics

There was, it has to be said, a sense of anti-climax when Mr Graham Wallace was appointed chief executive of Cable and Wireless four months ago.

The former Granada executive seemed to many a low-key successor to Mr Dick Brown, the charismatic American who showed a rare gift for deal-making during his two-and-a-bit years at the head of Britain's second largest telecommunications group.

The expectation had been that after Mr Brown's sudden departure last year to head EDS, the US computing services group, C & W's board would seek out another heavy hitter from the international telecoms establishment.

Instead, it chose Mr Wallace, an accountant by training, whose most extensive experience of the industry after leaving Granada had been two years as chief executive of Cable & Wireless Communications, the cable television and telephony group that his predecessor forged from Mercury Communications and a group of failing cable companies.

Colleagues believe it is easy to underestimate C & W's chief executive. Amiable and voluble on subjects that excite him - among which are Tottenham Hotspur football club and opera - the gravelly-voiced Mr Wallace (50) can seem reserved and aloof.

Mr Greg Clarke, his successor as head of CWC and before that its chief operating officer, says he is a complex character who combines warmth and humour with an acute sense of privacy. "You will not find him down at the pub with the lads," he says.

But observers' disappointment on learning of Mr Wallace's appointment was tempered with relief. C & W was profoundly in need of a period of stability and consolidation if it was to see Mr Brown's deals translated into shareholder value.

Mr Wallace, whose tenure at CWC was acknowledged as competent if unspectacular, could be trusted to guard the Brown legacy. "A safe pair of hands" was the comment from investors and analysts alike.

Last week, however, Mr Wallace proved that he was absolutely his own man, confounding his critics in the process. Announcing the full-year results of C & W, which employs 220 people in Ireland, he took the opportunity to air the conclusions from his inaugural review of the company's strategy.

Huge changes are in prospect. Mr Wallace describes them as evolutionary - others prefer revolutionary.

He is replacing Mr Brown's vision of a global family of integrated communications groups digging deeper into their local markets and providing everything from fixed wire telephony to television and Internet access.

Instead the model will be a global telecoms carrier providing services to business customers. The company's residential services are being stripped away, starting with its half-share in One-2-One, the British mobile operator, and the cable television component of CWC.

Mr Wallace is returning Britain's oldest telecoms company to its roots. The business logic is strong: 73 per cent of its revenues are already derived from business customers spread through the world's principal business centres.

Last year, through Mr Brown's initiative, C & W bought the Internet assets of the US group, MCI, giving it the bones of a global network based on Internet technology, the high-capacity network of the future.

"If we can deliver on this," Mr Wallace says, "we think it will result in significant future growth and increases in shareholder value". His principal aim is to see C & W shares trade at a premium to brokers' break-up valuations, rather than the present discount of 25 per cent or so.

Mr Wallace's successor at CWC pays tribute to the speed with which he picked up the intricacies of the telecoms business during his time there. Mr Clarke says Mr Wallace has never had proper recognition for the consummate skill with which he assembled CWC.

"He is a good boss," Mr Clarke says. "He combines flexibility with the ability to listen. But once he has made his mind up, he is absolutely resolute in pushing things through."

Mr Wallace's primary failing, which seems to stem from his dislike of the limelight, is a certain honesty, a reluctance to put a positive spin on matters that could be seen in an adverse light.

Last week, for example, the company's shares dipped after he announced an extra £1 billion sterling (€1.5 billion) of capital spending on network infrastructure. Others might have made more of a virtue out of an investment that is crucial to C & W's future.

If the new strategy works, C & W will present a simpler and clearer image to the world than it does now, benefiting both investors and business analysts.

And Mr Wallace has not forgotten his customers. For the first time this year, part of the bonus awarded to the group's top 100 managers will depend on customer satisfaction.

"That'll get their attention, I assure you," he grins.