British telecommunications group Cable & Wireless has unveiled a dramatic business overhaul that will see it split its UK and international businesses and chief executive Francesco Caio step down at the beginning of April.

Cable & Wireless also warned the City that pre-tax profits over the next financial year are likely to be "no higher" than in the current year to the end of March.

Shares in C&W opened sharply lower this morning - and were trading more than 12 per cent lower, down 14p at 100.5p, in early deals.

The telecoms group excluded Bulldog, its broadband unit, from its new forecast - which effectively amounted to a profits warning for next year - but included Energis, the rival it bought last year for £709 million.

Cable & Wireless has already said 700 people would lose their jobs as a result of its Energis acquisition.

A spokesman for C&W declined to comment on whether Mr Caio was entitled to or had negotiated a pay-off.

Having led the group through its transformation over the past three years, he will quit the chief executive's job at the beginning of the group's new financial year, but stay on at the company while a handover takes place.

C&W is set to provide further details on its move later this morning.

But the dramatic changes at the top of the company will see three new executives installed at the helm of two "self-contained operational units". One will be the UK business, including Bulldog, while the other will comprise the international businesses.

John Pluthero will become joint group managing director and chairman of the UK business. Jim Marsh, currently director of retail for the UK, becomes UK chief executive.

Harris Jones takes charge of the international arm of Cable & Wireless will Lord Robertson of Port Ellen - currently deputy chairman of the group - taking the role of non-executive chairman of this division.

All four will report directly to Richard Lapthorne, the chairman of C&W.

The group said today that the changes came in "recognition of the differing characteristics of the UK and international businesses" and insisted this was the "next natural phase of its development".

Mr Lapthorne said: "Today's reorganisation marks a significant step in the development of Cable & Wireless. The creation of the two operating units is the result of a huge amount of effort by the team and, in particular Francesco, who has worked closely with me to get us to this point.

"We have put in place the tools for the strategic repositioning of the UK business, though the short term environment remains extremely challenging. We are focused on operational delivery in all our markets."

C&W said that as a result of the split there would be a "significant reduction in scope and role" at the group's corporate headquarters but did not go into detail.

Shares in C&W closed last night at 114.5p valuing the group at nearly £2.7 billion.

To see what happens to the shares today click here

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