Gavin Darby, the recently appointed CEO of Cable & Wireless Worldwide, has laid bare the problems facing the UK-based telco.

In an interim management statement and business review published on Thursday, the CEO said CW&W had suffered from under investment and was overly complex.

The new comes just three days after Vodafone confirmed it is mulling over a takeover bid.

In the meantime, Darby said the business would be re-focussed on delivering sustainable cash flow with an emphasis on pace and quality of execution and reduction in complexity and cost.

“I aim to address our recent underperformance by re-focussing our objectives on cash generation and return on capital whilst continuing to deliver for our customers,” said Darby.

“Actions to reduce operational expenditure, reprioritise capital expenditure and deliver sustainable cash generation are underway.”

CW&W is the second largest provider of voice and data connectivity to UK enterprises and government, but is increasingly working with large systems integrators to win consultancy led communications mandates.

However, Darby noted that the company has insufficient capacity to participate in the high growth hosting market.

While investments made last year had improved customer service, they had also led to an increase in opex, he added.

Headcount in support functions, which is down seven percent since the beginning of the current financial year, will fall further by the year end.

The company is now working on a number of medium term strategic initiatives and said it will update the market on progress on these initiatives in May.

Trading in Q4 2011 was in line with management expectations, while the full year outlook remains unchanged.