Results signal countdown for Cable and Wireless sale

Calming market conditions increase chance of near-term sale

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: “Although management have indicated that its demerger plans are still on hold in light of continuing volatile markets, today’s solid and encouraging results could mark the start of the sale process for Cable & Wireless.”

“This is for three main reasons. Firstly, the new division name announced on 20 May (EAUS to C&W Worldwide), suggests further readiness for sale. Secondly, the company is continuing to thrive in a declining market owing to stealing market share from competitors and entering new markets. And thirdly, a steady stream of contract wins over recent months (Lloyds TSB Asset Finance, Morrisons and Regus) plus expansion into new markets (e.g. ethernet in Ireland and a number of products in the Indian market) suggests the company can continue to drive product distribution”, continues Heap.

“While the outperformance of the UK division will drive speculation about a demerger, there are also some danger areas; international growth is still poor, and declines in revenues in the legacy business are more severe than expected. Finally, growth with the high margin IP revenue within retail is likely to be weaker than previously thought”, concludes Heap.

For more information, please contact Fergus Campbell at Blue Rubicon on 07899 908483 or email: fergus.campbell@bluerubicon.com

Notes to editors:

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