director as chief executive of its new UK cable and telephone business and was in talks with the European Commission over future competition in the industry.

The high-profile appointment of Graham Wallace came despite calls by some European Union regulators for phone companies to divest their cable assets.

Cable & Wireless Chief Executive Richard H. Brown said the company is in talks with the European Commission, the executive agency of the EU, which wants telephone companies to divest their cable holdings in order to promote competition.

Cable & Wireless recently announced its plan to create an $8.8 billion company by buying control of three US-owned UK cable companies. It aims to merge the cable firms with its Mercury Communications Ltd., UK telephone company. That would create a formidable rival to British Telecommunications Plc, on which Mercury has had little impact, and others.

Wallace, 48, was formerly chief executive of Granada's UK rentals division and is now chief executive of Granada's restaurants and services division.

"What we liked about him is that he understands the media business and has had a lifetime career of being in the consumer service business,'' Brown said in an interview.

Wallace has also served on the board of British Sky Broadcasting Group Plc, which will be a direct competitor to Cable & Wireless Communications Ltd., the company's cable unit.

"He's had experience of dealing with (programme) content providers and has a great deal of merger experience from Granada's acquisition of Forte'', a UK hotelier, Brown added.

Wallace will report to Brown, who is also chairman of Cable & Wireless Communications.

Brown said the cable company is on track to list shares in London and New York by Spring and that the appointment of Wallace is one of many to come, including hiring a finance director.

Brown said he is not unduly concerned about the European Commission's plans to separate telephone and cable assets.

"The integration of telecommunications, media and information services is happening elsewhere in the world and the important thing is that the market wants this to happen,'' Brown said.

The goal is to create a company strong enough to compete with British Telecommunications.