Cable & Wireless, the troubled UK telecoms firm, appears to have averted a crisis after agreeing a deal with the Inland Revenue that will settle a £1.5 billion tax dispute.
Last night’s decision rescinds C&W’s obligation to set aside £1.5 billion to cover a tax liability linked to the 1999 sale of mobile operator One2One to Deutsche Bank. The pledge came to light in December when C&W had its credit rating reduced to junk status (see C&W Stock Nosedives Following Downgrade).
“Establishing clarity over the group’s tax position was an essential element in our planning for the future financial shape of the group,” said Lapthorne. “With the settlement in place and consequent anticipated release of funds under escrow, we now expect to have a firm financial base for securing the future of the company.”
Shares in Cable & Wireless were down 2.25p at 71p at the close of trading today.