Value Creation plan postponed by Cable and Wireless

Due to the current economic crisis around the world the possibility of Cable and Wireless being broken up has been placed on hold, at least until the global situation stabilises.

Any thoughts of a value creation plan for its shareholder were considered by the telecoms operator as an act that would make no sense until the financial markets return to a level of normality.

According to business analyst it was more than likely that its plans would be to separate the company into two divisions, one for the international market and the other for the UK, but Cable has never commented on the plans it is reviewing.

In the first half of the financial year the company has advised that both businesses have maintained healthy profits, showing £1.6 billion in group revenues, an increase of 5 percent and £175 in pre-tax profits before exceptional items, which showed a rise of 72 percent.

“We’ve seen no effect from the broader economic slowdown in the first half. Indeed we continue to trade strongly and have raised underlying earnings guidance for the full year accordingly,” said Richard Lapthorne, the company chairman.

With continuing sales growth and orders, the business has also confirmed that the UK division, which has now changed its name to Europe, Asia and the US has also enjoyed good margins on the long-term business that it has won.

In an attempt to focus its business to serving the larger margin internet services of the bigger corporations it has, in the last several years, reorganized the structure of its business.

With a 5 percent increase in its revenues and a rise of 13 percent in underlying earnings over the six months running up to 30th September, the international arm of the business, which services 39 countries with domestic and fixed line, broadband and mobile access has produced “one of its best results for a long time”.

“Whilst our trading position is in good health, the same cannot be said of the financial markets which are extremely volatile and which currently provide no basis for proper financial planning. Consequently, we have postponed a final decision on value realisation until we can foresee a sustained period of normality returning to the financial markets.” Said Mr. Lapthorne.