The speculation centers on several potential buyers. The first is the UK mobile goliath Vodafone Group Plc, although it has been quick to deny any interest in the UK fixed-line carrier. The second potential buyer is thought to be France Telecom SA, and there is speculation about a leveraged buyout from a private equity consortium, or from Iceland’s richest man, Thor Bjorgolfsson. Pan-European telecoms provider Colt Telecom Group Plc, whose major shareholder is the US fund manager Fidelity, is also said to be interested.

Of the potential suitors, most analysts agree that France Telecom is the more likely because a purchase of C&W would give it entry to the ultra-competitive but valuable UK market where it would compete with BT Group Plc. It is thought any bid from the VC community would entail a breakup of the carrier, with a sell-off of its constituent parts.

Speculation regarding how long C&W will remain independent has been going on for some time. C&W’s own chairman Richard Lapthorne recently admitted that private equity buyers would be attracted to the telecom group’s low-rated shares, a statement that many took to interpret that the company was hoisting the For Sale sign.

On Wednesday, shares in C&W fell 2.6% to 109.7 pence ($1.91) on the London Stock Exchange as of 5pm GMT, but at one stage the shares had risen as high as 113 pence ($1.97), giving it a market value of 2.7bn pounds ($4.72bn).

Earlier this month, the carrier was at the center of intense speculation following a widely leaked memo to all C&W staff from UK chairman John Pluthero in which he warned this is no longer a place for the timid and said those worried about the changes should step off the bus. In a clear indication of how bad things had become at C&W, the leaked memo was headed: Our business today – in bad shape. It also warned of the difficulties ahead. Congratulations, we work for an underperforming business in a crappy industry and it’s going to be hell for the next 12 months, Pluthero wrote.

In January, C&W issued its second profit warning in four months, and announced the departure of chief executive Francesco Caio. It also revealed plans to split the business into two operational units: UK (including Bulldog) and International.

As part of Pluthero’s turnaround strategy, C&W has warned that UK headcount is expected to fall from more than 5,500 to somewhere between 2,500 and 3,500 over the next four to five years. Some 350 jobs are expected to go this year alone.

The UK workforce includes the staff that C&W inherited last August when it purchased alternative telecoms provider Energis Communications Ltd for 709m pounds ($1.25bn). That acquisition increased C&W’s UK fixed-line market share from 9% to just over 13%, and was supposed to give C&W greater scale to compete more effectively with former incumbent BT Group Plc.

While the news of the job losses grabbed most of the headlines, the more radical move was the fact that Pluthero intends to reduce C&W’s UK customer base by about 90% as the company looks to concentrate on fewer, larger customers. This means reducing C&W’s customer base from 30,000 to about 3,000 large corporate customers and public institutions.

The London, UK-based group makes most of its money in the UK by providing services to other telecoms companies. However, in the late 90s the group was viewed as poorly run, overly bureaucratic, and cost-heavy. It made a series of disastrous acquisitions, and in 2003 Francesco Caio was appointed to implement a three-year restructuring program that included cutting thousands of jobs. Under his leadership, C&W pulled out of the US and Japan to focus on its UK and Caribbean-based national telecoms operations.