C&W revives plans to split its operations
THE eagerly-awaited confirmation that Cable & Wireless (C&W) is reviving its de-merger plans was overshadowed yesterday by the telecoms operator cutting its full-year earnings guidance.
Shares dropped by six per cent amid profit-taking, a lack of detail on the de-merger and disappointment over the performance of C&W’s International business (CWI) which provides fixed-line and mobile services in regions like Caribbean, Macau, and Panama. The stock closed down 6.2 per cent at 139p.
The shares had rocketed over the previous week as the market anticipated that C&W would resurrect plans to split CWI and its Worldwide (WW) division – which provides business communications services across Europe, Asia and the US.
The plans were put on hold in November last year due to deteriorating market conditions, but C&W chairman Richard Lapthorne said yesterday that “signs of more settled conditions” had allowed the group to dust-off its plans.
The two divisions already operate separately and WW executive chairman Jon Pluthero and CWI chief executive Tony Rice both signalled their intention to lead the respective businesses to the next stage.
“We have worked hard to bring the businesses to where they are and are keen to see the fruits of out labour,” said Pluthero.
The two firms will have separate boards, but where current chairman Lapthorne will sit is to be confirmed, along with the detail of the split, before the end of the month.
In its interim report, C&W said it had cut the earnings guidance for CWI to between $880m (£531m) to $900m because falling tourist numbers in the Caribbean had resulted in less overall demand for its services in the region. Pre-tax profit in the period was $202m, up 9.5 per cent from $190m a year earlier.