Cable and Wireless in demerger plan
Thursday November 05 2009
Telecommunications giant Cable and Wireless has revived demerger proposals that will see the group split its UK and regional businesses.
Cable put the break-up plans on ice last November at the height of the financial crisis due to the stock market turmoil and credit squeeze.
Chairman Richard Lapthorne used the company's half-year results to confirm plans to list the two operations as independent, publicly-quoted companies.
Cable's worldwide business provides telecoms services to blue-chip customers in the UK and overseas, while the regional telecoms arm operates as four business units in the Caribbean, Panama, Macau and Monaco.
The company posted a 30% rise in half-year earnings to £463 million, but the improvement was overshadowed by a revision to full-year guidance in the regional business due to weaker Caribbean trading. Shares were 5% lower on Thursday.
Cable said its worldwide business was well positioned after growing market share and expanding its order book.
Revenues grew by £138 million to £1.14 billion due to the acquisition of business telecoms firm Thus, which offset a reduction in low margin voice calls and discretionary spending by some customers in the recession.
Higher-margin internet, data and hosting revenues accounted for 52% of total sales in the worldwide division, boosting margins as a result. Underlying earnings in the half year were £205 million, against £142 million last time.
Cable expects to publish further details on the demerger before the end of the month.
Mr Lapthorne said the split would deliver value for shareholders and enable both businesses to pursue their own strategies.
Press Association
