C&W revives demerger

Telecoms group Cable & Wireless has revived plans to split itself in to two parts.

The plans, abandoned last year at the height of the turmoil in the financial markets, will involve the group’s Worldwide and International divisions becoming two separate publicly quoted entities.

‘The board believes that a demerger is the right structure to drive further growth and value for shareholders by enabling both businesses to pursue their strategies independently, and it is keen to push ahead as quickly as possible. We are making good progress and will provide further details before the end of the month,’ said Richard Lapthorne, chairman of Cable & Wireless (C&W).

The announcement accompanied interim results that were much in line with market expectations, although full-year earnings guidance for C&W International was lowered, due to weaker trading conditions in the Caribbean.

Revenue in the six months to the end of September rose 13% to £1,855m from £1,646m a year earlier. Market expectations were for sales around the £1.19bn mark.

Earning before interest, tax, depreciation and amortisation (EBITDA) jumped 30% to £463m from £357m, slightly above market expectations.

Profit before tax rose to £171m from £129m the year before.

Cable & Wireless International’s EBITDA was flat, largely due to the decline in tourism in the Caribbean markets. The group has decided to adjust full year EBITDA guidance for C&W International down by $35m - $55m to a range running from $880m to $900m.

Performance at C&W Worldwide was more encouraging, with EBITDA up to £205m from £142m in the first half of the previous financial year.

Trading at recently acquired Thus is on track after some initial teething problems with the integration.

The interim dividend has been increased by 12% to 3.16p. The company expects total dividends for the year to be 9.5p.

Source: Sharecast, 5th November 2009

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