UP to 1,500 jobs are to be axed in the UK by ailing telecoms firm Cable and Wireless.

The group also plans to pull out of the US to protect itself from "difficult market conditions".

The restructuring plans, which include suspending the shares dividend, were revealed as the company reported a record £6.5bn annual loss after suffering a "turbulent year" due to problems at its Internet and data services division Global.

The measures, intended to reverse a two-year decline which has seen shares slump with a string of profit warnings, will see Cable and Wireless reduce its staff during the next two years.

C&W suffered after investing heavily at the height of the technology boom in an effort to lure customers to its Internet and e-mail services.

The company employs about 5,500 workers in the UK. A spokesman said it was too early to identify where the axe would fall, but said it was looking across the whole operation.

The UK is C&W's biggest business unit, where it is second only to BT.

It has sites at Birmingham, Manchester, Bracknell and Milton Keynes.

Union officials are concerned that the restructuring could lead to the closure of some sites.

The Communication Workers Union attacked the job losses saying the company was pursuing a policy of "slash and burn".

Restructuring in the UK is expected to take three years, with the business returning to profitability in the financial year 2005/2006.

Cable and Wireless has an office in Newcastle employing fewer than 50 staff. The company could not say if it was affected by yesterday's announcement.