Cable and Wireless to split in 2, reports profit

posted: 20 DAYS 15 HOURS AGO

Text SizeAAA

LONDON -British telecoms systems company Cable and Wireless PLC announced Thursday that it intends to split into two units, CWI and Worldwide, to increase profit potential.

The company said details of its plans would be disclosed before the end of the month.

Cable and Wireless also announced a net profit of 120 million pounds ($198 million) for the six months ending Sept. 30, compared to 83 million pounds a year ago.

Revenue rose from 1.65 billion pounds to 1.86 billion pounds in the current year.

Cable and Wireless shares were down 4.8 percent 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.

Revenue in the CWI division was down 6 percent, driven down by depressed tourism and rising unemployment in key Caribbean markets.

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 U.K.

Cable and Wireless Chairman Richard Lapthorne said the company 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.

2009-11-05 05:48:50