Operating profits at Cable & Wireless Communications (CWC) slumped by nearly a half to $95m (£56m) as the leading telecoms provider to Latin America and the Caribbean continued to struggle. Although its mobile, broadband and TV revenues grew - including a 23 per cent rise in mobile-data sales - those gains were offset by falling demand for its fixed-line telephone and enterprise products.
The decline did motivate CWC to slash its operating costs by 5 per cent to $763m, which widened its cash-profit margin to about a third. The company also revamped its strategy to focus on the growth markets in telecoms: mobile, TV, broadband and business services. The first step in its transformation will be 'Project Marlin', its plan to invest an extra $250m in its mobile networks over the next three years, including capital spending of $1.05bn.
Funding the venture shouldn't be problematic: CWC disposed of its majority stake in Monaco Telecom this year. The sale proceeds of $445m should lower net debt to $205m - a reduction of $1.4bn compared to last year.
Broker JP Morgan Cazenove expects adjusted pre-tax profits of $241m this year, giving EPS of 4.1¢, rising to $282m in 2015-16, with EPS of 5.1¢.
| CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 54p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 54-55p | 12-MONTH HIGH: | 59p | LOW: 38p |
| DIVIDEND YIELD: | 4.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 19p* | NET DEBT: | 24%** | |
| Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2010 | 2.35 | 383 | 4.9 | 3.34 |
| 2011 | 2.44 | 462 | 7.6 | 8.00 |
| 2012 | 2.03 | -117 | -7.8 | 8.00 |
| 2013 (restated) | 1.94 | 27 | -3.8 | 4.00 |
| 2014 | 1.87 | -70 | -7.2 | 4.00 |
| % change | -4 | - | - | - |
Ex-div: 28 May Payment: 8 Aug *Includes intangible assets of $526m, or 21p a share **Post-Monaco Telecom disposal, pro forma net debt of $205m £1=$1.69 | ||||
