Cable & Wireless announced yesterday that is considering demerging some of its businesses and is exploring other options to improve shareholder value after beating City forecasts with a 23% rise in annual underlying core earnings.
Cable & Wireless announced yesterday that is considering demerging some of its businesses and is exploring other options to improve shareholder value after beating City forecasts with a 23% rise in annual underlying core earnings.
The Bracknell, Berkshire-based group, which is Britain's biggest telecoms provider after BT, also forecast strong earnings for 2008/2009 after seeing its Europe, Asia and US business return to revenue growth.
C&W split itself into two separate units in 2006, prompting speculation it would eventually lead to a full demerger.
"We've made good progress in our turnaround and we've talked (before) about considering value realisation," said finance director Tony Rice in a conference call.
"There are a number of options, Obviously there is a demerger, rationalisation of the portfolio or leveraging and returning capital to shareholders and we're looking at all of those. We're talking about doing something in 2008 and 2009."
The news sent shares in the group up by 4.125p to 156.625p at the close of London dealing. Until yesterday, C&W's share price had fallen by 18% this year and it is one of the poorer performing stocks on the FTSE All-Share Telecommunications Index.
However, City analysts said the company's performance appeared to be improving. They applauded C&W's outlook and described the group's statement as solid.
C&W reported earnings before interest, tax, depreciation and amortisation (Ebitda) of £605m for the year to March 31, ahead of the £593m predicted by Square Milers.
It also forecast group Ebitda in the range of £702m and £725m for the year to March 2009.
In a statement to the Stock Exchange, the company said: "Financially and operationally, Cable & Wireless is demonstrating the necessary momentum for the board to consider the next steps to deliver further value for shareholders,"
"Ebitda (for the European, Asian and US business) more than doubled, and we are now targeting a further increase of 30% to 35% for 2008/09."
It forecast growth in Ebitda for the international division, which excludes Europe, Asia and the US, for 2008/2009 of between 8% and 10%.
"Results should rebuild confidence following the investor day (in March)," analysts at broker Cazenove said in a note to investors.
