Corporate telecoms group Cable & Wireless said this morning its cash-draining Global division would shed around 3,500 jobs as it retreats from US and continental European domestic markets.
Announcing the results of a strategic review, the British company said the restructuring would cost around £800 million ($1.3 billion) and bring £400 million in operational savings a year.
The move represents a reversal for chief executive Mr Graham Wallace, architect of the Global division that provides web site hosting and telecoms services for companies.
"These are tough measures in a tough market but we are committed to achieving our cash flow target for Cable & Wireless Global," Wallace said in a statement.
He reiterated that it expected Global to become free cash flow positive by March 2004.
The news came as C&W posted a steep drop in first-half earnings before interest, tax, depreciation, amortisation and exceptional items of £172 million - half last year's level but above analysts' forecasts.
It said it had written off £2.7 billion in goodwill at Global and would write down £787 million on fixed assets at the division.
Revenue for the six months to September was £2.358 billion and the interim dividend was 1.6 pence per share, both in line with forecasts.
While most telecoms companies are gasping under crushing debt burdens, C&W said its net cash was £2.216 billion.