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International News>Cable and Wireless to split - Caribbean underperforms but group reports profit- AP and Gleaner |
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British telecoms systems company Cable and Wireless PLC an-nounced yesterday that it intends to split into two units, CWI and Worldwide, to increase profit potential.
The company said details of its demerger plans would be disclosed before the end of the month.
Cable and Wireless also announced a net profit of £120 million (US$198 million) for the six months ending September 30, compared to £83 million a year ago.
Revenue rose from £1.65 billion to £1.86 billion in the current year.
Revenue in the CWI division was down 6.0 per cent, driven down by depressed tourism and rising unemployment in key Caribbean markets.
CW's regional operations currently trade under the name LIME. Revenue for the region was off by 10 per cent at US$427, while EBITDA was down 15 per cent at US$132 million, excluding exceptional items.
CWI group Chief Executive Officer Tony Rice said the first phase of the 'One Caribbean' model being created across LIME's 13 markets has been finalised, and that the next phase would focus on "protecting market share across the board", and stepping up focus on creating a regional enterprise.
The company also claimed that it is holding market leadership in "most products and services".
Cable and Wireless shares were down 4.8 per cent at 140.9 pence on the London Stock Exchange.
Jonathan Groocock, analyst at Investec Securities, said the earnings report was weak.
"In the short term, we expect the shares to weaken given the poor fundamentals and lack of certainty over demerger value creation in the absence of a trade buyer," he said.
CWI offers mobile and fixed-line services in 33 countries, and is a major player in the Caribbean, Panama, Macau and Monaco. The Worldwide division provides corporate and carrier services, earning most of its revenue in the UK.
Cable and Wireless Chairman Richard Lapthorne said the com-pany was moving to restructure now because of "emerging signs of more settled conditions in financial markets."
"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," Lapthorne said.
- AP and Gleaner reports