Higher mobile and broadband sales, along with cost reductions, fuelled a 7 per cent rise in adjusted cash profits to $585m (£377m) at Cable & Wireless Communications (CWC). But investors sent the Caribbean and Central American telco's shares down 1 per cent on news that recently acquired Columbus International posted cash profits of $255m, about 7 per cent behind expectations. That led management to forecast an earnings decline this year.
Management expect the Columbus deal to broaden CWC's product range, reduce churn and open up cross-selling opportunities. It is also expected to generate an annualised $85m in ongoing cost savings, and $145m in one-off capital expenditure savings. However, management predicts realising those synergies will cost $110m.
CWC continued to offset falling landline revenues by selling bundles of mobile, broadband and fixed-line services. It also upgraded its networks and rolled out high-speed LTE data services, which attracted mobile subscribers and drove up data usage. The strategy fuelled a 41 per cent rise in constant-currency cash profits to $238m at its Caribbean-focused Lime business.
Capital spending soared by more than three-quarters to $442m as CWC pushed on with Project Marlin, its $1bn network investment plan. But substantial layoffs, the sale of peripheral properties and reduced power consumption meant full-year operating costs fell 2 per cent to $710m.
Deutsche Bank analysts cut their forecast cash profits by about 6 per cent to $925m, giving EPS of 3¢ (from $585m and 5¢ in 2015).
CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
---|---|---|---|---|
ORD PRICE: | 66p | MARKET VALUE: | £2.9bn | |
TOUCH: | 65-66p | 12-MONTH HIGH: | 71p | LOW: 43p |
DIVIDEND YIELD: | 3.9% | PE RATIO: | na | |
NET ASSET VALUE: | 26¢* | NET DEBT: | 160% |
Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
---|---|---|---|---|
2011 | 2.44 | 462 | 7.6 | 8.0 |
2012 | 2.03 | -117 | -7.8 | 8.0 |
2013 | 1.94 | 27 | -3.8 | 4.0 |
2014 (restated)† | 1.69 | -98 | -8.4 | 4.0 |
2015 | 1.75 | -1 | -3.8 | 4.0 |
% change | +4 | - | - | - |
Ex-div: 28 May Payment: 7 Aug *Includes intangible assets of $2.95bn, or 68¢ a share †Restated to reflect disposal of Monaco Telecom and the cancellation of plans to sell the Seychelles business £1=$1.55 |