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Mobile data growth boosts Cable & Wireless

RESULTS: The growing popularity of smartphones, and an acquisition in the Bahamas, have helped boost Cable & Wireless
November 4, 2011

The continued adoption of smartphones and the rise in mobile data traffic helped lift Cable & Wireless's half-year performance. Indeed, mobile data revenues surged 94 per cent in the period and now account for 7 per cent of group sales. Chief executive Tony Rice expects this rising trend to continue in the second half, too, so the group has invested $160m (£100m) in mobile data networks during the period.

IC TIP: Hold at 42p

Meanwhile, April's $210m acquisition of the Bahamas Telecommunications Company (BTC) injected some sunshine into the group's ailing Caribbean business – Caribbean sales rose 44 per cent to $576m. Although strip out the impact of BTC and sales from the region would have slipped to $399m, from $401m. Growing iPhone popularity in Macau lifted sales there to $258m, from $172m last year, while mobile revenues almost doubled to $151m. Revenues generated in Panama also ticked up by 5 per cent to $308m, while sales in Monaco & Islands grew 2 per cent to $300m, despite currency devaluations in the Maldives.

Continued market turbulence, however, has widened the pensions deficit to £78m, from last year's £51m. Investec Securities expects adjusted full-year pre-tax profit of $384.7m, giving adjusted EPS of 6¢ (from $446m and 6.8¢).

CABLE & WIRELESS COMMUNICATIONS (CWC)

ORD PRICE:42pMARKET VALUE:£1.06bn
TOUCH:41-42p12-MONTH HIGH:55pLOW: 30p
DIVIDEND YIELD:11.9%PE RATIO:11
NET ASSET VALUE: 6¢*NET DEBT:$1.4bn

Half-year to 30 SepTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20101.162103.302.67
20111.441452.102.67
% change+24-31-36 –

Ex-div: 9 Nov

Payment: 12 Jan

*Includes intangible assets of $564m, or 22¢ a share

£1 = $1.60