Shareholders may welcome Cable & Wireless's (C&W) decision this week to return around GBP1.7bn via a share buy-back and special dividend, but the move illustrates uncertainties over its underlying business.
That money could be spent on winning market share or making acquisitions, taking advantage of depressed valuations. But chief executive Graham Wallace thinks it would be better spent elsewhere.
The company has net cash of GBP4.7bn thanks to a recent disposal programme. After the special dividend of 11.5p and buying back up to 15 per cent of its shares, it says only another GBP1bn will be required to reach break-even. That leaves GBP2bn for acquisitions. Mr Wallace would not comment on persistent rumours that he plans to buy rival Colt Telecom.