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Thursday, November 09, 2006

C&W: Bulldog LLU Fiasco

On the 28th May 2004, C&W acquired Bulldog for £18.6m.

For the rest of 2004/5 FY, Bulldog had a cash outflow of £57m. Capital Expenditures for the year were £27m.

In the 2005/6 FY, Bulldog had a cash outflow of £163m. Capital Expenditures for the year were £70m.

Yesterday, in the C&W Interims, it was announced that Bulldog had a further £75m cash outflow in the first half with incredibly another £80m forecast until the end of the year. This is despite having sold the customer base for £10m to Pipex who now becomes a wholesale customer of C&W, whilst seemingly still building out its own LLU infrastructure.

In summary, C&W will have spent £284m of cash on the Bulldog fiasco. C&W will be left with 800 exchanges unbundled with quite a few ongoing overheads which probably will not be covered with a Pipex wholesale contract. Although the worst bits of the C&W unbundling nightmare are over, C&W still has to make quite a few more sales before the losses are finally over.