Caribbean and Latin American culture may be laid-back, but regional telco Cable & Wireless Communications (CWC) can't afford to lounge around. Alongside its first-half results, it set out plans to acquire Columbus International, a rival telephony, broadband and pay-TV provider, for about $3bn (£1.9bn) in cash and debt.
A successful deal would complement CWC's 'Project Marlin' - a three-year, $250m investment programme in its pay-TV, broadband and mobile services, intended to offset fixed-line declines. Columbus has its own high-speed fibre network, as well as 380,000 pay-TV customers. CWC thinks the tie-up would lower its capital expenditure by $145m for three years, and generate $85m in annual cost synergies down the line.
Investors sent CWC's shares down 7 per cent on the news, even as the group's first-half cash profits rose 5 per cent to $277m. (The surge in reported pre-tax profit partly reflects lower finance expenses due to an early bond redemption, as well as redundancy payments last year.)
CWC's fixed-line voice revenues slid 6 per cent. On the bright side, however, TV and broadband subscribers were up 14 and 4 per cent, respectively, which drove a 4 per cent increase in divisional revenue to $99m. CWC also reduced its operating costs by 2 per cent and is on track to reduce them by $100m this year.
Prior to these results, broker JPMorgan Cazenove forecast full-year EPS of 4.1¢, up from 2.6¢.
| CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 45p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 44-45p | 12-MONTH HIGH: | 59p | LOW: 43p |
| DIVIDEND YIELD: | 5.6% | PE RATIO: | na | |
| NET ASSET VALUE: | 27¢* | NET DEBT: | 44% | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2013 | 841 | 17 | -2.0 | 1.33 |
| 2014 | 848 | 132 | 1.9 | 1.33 |
| % change | +1 | +676 | - | - |
Ex-div: 20 Nov Payment: 9 Jan *Includes intangible assets of $183m, or 7¢ a share £1=$1.60 | ||||
