ON WEDNESDAY, Cable & Wireless Jamaica (C&WJ) headed by Gary Barrow, saw its share price soar to a
52-week high of $1.50 before closing at $1.48. It was also was the volume leader with 1,666,804 units (34.61 per cent). Not to long ago the share price stood at around 75 cents as the integrated telecoms company's financial results floundered.
There is a perception that the company is beginning the process of a turnaround of sorts and this may be one of the reasons why investors are again looking at this stock. Only last week C&WJ's chief operations officer, Sean Bryan, told the Financial Gleaner, "Not too long ago we said that we would be making an $800 million investment in our mobile division in order to the capacity of our network. This meant overlaying our current GSM/GPRS 1900 megahertz high frequency system with a lower frequency 850 megahertz signal. We announced that this would be completed by July 1. We completed 135 overlays ahead of schedule and we can now say that we have the best coverage on the island."
By while the local arm of C&W turns a corner, the recovery of the group took a stumble yesterday as it admitted revenues fell during the past three months across its businesses, and trading continued to be tough.
CHEERED BY INVESTORS
Coupled with a downbeat assessment of corporate appetite for communications services from rival Colt Telecom, the announcement pushed down C&W's shares by five per cent. The decline in the share price was exacerbated by the company's decision to count Tuesday as the cut-off date for shareholders to receive its 3.15p annual dividend. The company was cheered by investors when it returned to the dividend list in June after halting payments for a year while it wrestled with the consequences of an ill-timed acquisition strategy under its previous management. Chief executive Francesco Caio, who took over the helm just over a year ago, admitted yesterday that "trading conditions remain very challenging across all markets" as C&W reported first quarter revenues of £163.798m compared with £163.974m during the previous year. In the company's core U.K. market, where C&W has been taking out costs and trying to increase its higher margin business, revenues at £163.406m were flat against the same quarter a year ago and down four per cent compared with the previous three months. The company said the comparison with the fourth quarter was slightly distorted by the fact that the previous three months had been uncharacteristically strong as C&W won several new contracts. The decline, however, disappointed analysts as C&W had emphasised the fact that it had halted the slide in U.K. revenues when it announced its annual results last month. Nomura analyst Mark James said: "C&W's trading statement gives little comfort to anyone anticipating a turnaround of the U.K. business."
In a note on the stock, he said: "The restructuring story looks to be moving backwards, rather than forwards." Worries about the state of the British market for communications were heightened by results from Colt, which saw its shares drop by a third earlier this month as it warned annual profits will be lower than expected. Although the shares which have lost half their value this year recovered slightly yesterday as the group's second quarter figures contained no further nasty surprises, Colt said trading over the past three months had been 'tougher than expected'. The company, majority owned by U.S. investor Fidelity, added that take-up of data products and higher margin voice telephony services by business customers had also been 'disappointing'. Analysts said Colt's results showed that the much desired pick-up in spending on lucrative new wave telecoms services such as voice calls made over the Internet had yet to materialise. Alongside the dismal U.K. market, C&W admitted yesterday that its overseas operations, which stretch from the Falkland islands to the Middle East, are suffering the effects of increased competition. Revenues in the first quarter from these 'national telcos' was flat compared with the previous year and down three per cent compared with the fourth quarter. The group's Caribbean operations saw revenues drop to £163.140m from £163; 167m in the previous year as competition was introduced in the fixed-line market in Jamaica. C&W's mobile phone operators in Barbados and the Cayman islands also suffered from the arrival of new rivals.
Courtesy of Guardian Newspapers Limited
