First-half figures from Cable & Wireless Communications (CWC) were eclipsed by news that Liberty Global could soon mount a bid for the Caribbean and Latin American telco. The owner of Virgin Media now has until 19 November to make a firm offer. Jefferies analysts think the main draw is CWC's $8bn (£5.2bn) in tax assets - lossmaking operations to offset other profits - in the US and UK. They think a potential offer could reach 100p a share, valuing the group at north of $6.6bn.
Mounting competition and lower demand for landline services meant earnings fell in three of CWC's five territories, sending adjusted operating profits down 5 per cent to $215m. The sunshine in these results was the key Caribbean region, where constant-currency cash profits leapt 23 per cent to $213m as network investments attracted mobile and broadband subscribers.
CWC's directors also bumped up their predicted synergies from Columbus International, a regional peer acquired in March 2014. They now expect to save $125m in operating costs by March 2018, up from $85m. They recently rolled out bundles of TV, broadband, mobile and fixed-line services in the Caribbean under the 'Flow' brand, and are gearing up to launch Flow Sports Network, which will broadcast exclusive content such as Premier League football and the Rio Olympics in 2016.
Consensus forecast EPS for the full financial year is 3.3¢ (17.5¢ in FY2015).
| CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 74.5p | MARKET VALUE: | £3.3bn | |
| TOUCH: | 74.3-74.5p | 12-MONTH HIGH: | 77p | LOW: 44p |
| DIVIDEND YIELD: | 2.3%† | PE RATIO: | NA | |
| NET ASSET VALUE: | 21¢* | NET DEBT: | 224% | |
| Half-year to 30 Sep | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 0.85 | 132 | 1.9 | 1.33 |
| 2015 | 1.18 | -1 | -1.3 | tba |
| % change | +39 | -101 | - | - |
Ex-div: tba Payment: tba *Includes intangible assets of $3.0bn, or 69¢ a share †CWC intends to pay an interim dividend of 1.33¢ a share if Liberty Global declines to make a firm offer £1=$1.54 | ||||
