Continued adoption of smartphones and smart devices has helped Cable & Wireless Communications (CWC) to beat City forecasts on an adjusted basis by reporting a five per cent rise in operating profits to $557m. Guidance is for a similar performance this year which prompted investors to chase the shares 18 per cent higher post results even though the dividend was halved "to a sustainable level" of 4 cents for the 2012/13 financial year.
Data remains the biggest opportunity as CWC exploits low smartphone penetration in all its markets. Indeed, almost a quarter of the customer base now use smart devices, up from 14 per cent 15 months ago. So while mobile revenues increased 37 per cent to $1.4bn, non-voice mobile revenues soared 82 per cent to account for 8 per cent of group turnover.
Smartphone adoption has been particularly strong in Macau, largely on the back of the region's strong economic growth, and over 50 per cent of the customer base are now on mobile data plans. In fact, all of the 39 per cent rise in Macau's revenues, up from $377m to $524m, was accounted for by mobile. However, the Caribbean segment is proving weak and revenues declined 4 per cent if you strip out the contribution from the Bahamas business acquired 13 months ago. So headcount will be reduced at a cost of $30m-35m to cut overheads.
CABLE & WIRELESS COMMUNICATIONS (CWC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 33.1p | MARKET VALUE: | £ 837m | |
| TOUCH: | 33-33.1p | 12-MONTH HIGH: | 48p | LOW:27.8p |
| DIVIDEND YIELD: | 15.4% | PE RATIO: | NA | |
| NET ASSET VALUE: | * | NET DEBT: | $1.4bn | |
| Year to 31 Mar | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 2.45 | 394 | 6.40 | na |
| 2010 | 2.35 | 383 | 4.90 | 3.34 |
| 2011 | 2.44 | 462 | 7.60 | 8.00 |
| 2012 | 2.88 | 104 | -3.10 | 8.00 |
| % change | +18 | - | - | |
Ex-div:30 May Payment:10 Aug * negative shareholders funds of $77m £1=$1.568 | ||||
