Cable and wireless - a beacon in the current recession?

If you are writing on today’s results from Cable & Wireless (C&W), please consider the following comment from Richard Heap, Head of Telecoms, at business and financial advisers BDO.

Richard Heap, Head of Telecoms, at BDO says: “Considering the current market, today’s results are encouraging and C&W has proudly stated that it believes it will meet this year’s targets.” 

“We were surprised however, that C&W’s management did not follow Vodafone’s lead in upgrading guidance in line with favourable dollar to pound FX rates.  This raises concerns that C&W will struggle to meet its target and is likely to leave investors disappointed.  It is also a likely reason for C&W's share price dropping by nearly four per cent this morning,” continues Heap.

“However, C&W continues to be a beacon in the current recession and management have confirmed that its recent acquisition of Thus will boost pre-exceptional EBITDA by £30m.  In addition, it has also announced a number of recent contract wins - the largest of which is a 5-year contract worth £79m with Centrica,” points out Heap.

“Although largely glossed over in the announcement, C&W mentioned there was a ‘softening’ of revenues in tourist led economies.  According to earlier results, eight per cent of international revenues are accounted for by mobile roaming calls, therefore a fall of revenues in this area could leave the group exposed not only to the seasonal cyclicality of the industry, but also to the global downturn in tourism due to the recession,” concludes Heap.

ENDS

For more information, please contact Dee Crooks at BDO on 020 7893 2761 / 07815 172 051 or email dee.crooks@bdo.co.uk

Notes to editors:

BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO international is a world-wide network of public accounting firms, called BDO Member Firms. Each BDO Member Firm is an independent legal entity in its own country. The network is coordinated by BDO Global Coordination B.V., incorporated in The Netherlands, with its statutory seat in Eindhoven (trade register registration number 33205251) and with an office at Boulevard de la Woluwe 60, 1200 Brussels, Belgium, where the International Executive Office is located. In the UK the Belfast Firm is operated by a separate Partnership known as BDO - Belfast.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO LLP and BDO - Belfast are both authorised and regulated by the Financial Services Authority to conduct investment business.

BDO is an award winning firm.  Recent achievements include:

• Best Workplace UK - Financial Times 2008
• 100 Best Companies to Work For - The Sunday Times 2008
• Audit Team of the Year – Accountancy Age Awards 2008
• Tax Team of the Year – Accountancy Age Awards 2008
• Corporate Finance Deal of the Year – Accountancy Age Awards 2008
• Employer of the Year – Accountancy Age Awards 2007
• The Women of Achievement Award –  Women in the City 2008
• Top 50 Where Women Want to Work - The Times 2007
• Business Superbrand - Business Superbrands 2008