Cable & Wireless: first profit for three years, but still more job cuts

10 Nov 2004

The UK’s second largest telecoms operator Cable & Wireless (C&W) has reported net profits of GBP204 million (USD378 million) for the first half of its fiscal year to 30 September, compared with a loss of GBP80 million for the corresponding period of 2003, its first profit for three years. Sales for the six-month period dipped to GBP1.62 billion from GBP1.73 billion a year ago, though the operator was quick to point out that the fall reflected in part a 2% decline in revenue at constant currency and a 5% fall resulting from adverse exchange rate fluctuations. The group was expected to report net income of GBP104 million on revenues of GBP1.61 billion. C&W attributed the positive results to the successful implementation of a series of cost-cutting measures and its decision to withdraw from unprofitable businesses. Under chief executive Franceso Caio, C&W is 18 months into a three-year plan to improve both turnover and profits in its domestic market, while simultaneously staving off competition in the Caribbean region. To this end Caio exited from the US market in January this year, and, last month, agreed to sell the group’s Japanese venture C&W IDC to Softbank Corp for GBP62.9 million.

In the UK, C&W has shed around 23% of its workforce since 2003. Caio has now announced new plans to take direct control of the UK business – its biggest market – by reshuffling his management team (including the loss of CEO Royston Hoggath and COO Kevin Loosemore), closing the London head office, which will be moved to Bracknell, returning GBP250 million to shareholders through a share repurchase programme, and cutting a further 600 jobs in the UK and Europe to reduce costs. C&W has come under increasing pressure in the UK from rivals such as Thus and COLT. To revive growth, Caio plans to invest up to GBP225 million in 2004-05 to increase the number of direct broadband connections it has to British homes. By July 2005 the company hopes to have installed its own equipment in exchanges owned by former monopoly operator BT, with the aim of generating annual sales of GBP250 million within four years. It is also hoping to capitalise on the May acquisition of UK operator Bulldog Communications for GBP18 million, which offers voice, data and internet access services under the Bulldog branding.

United Kingdom, Cable & Wireless (UK)
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