C&W demerger on track as lowers guidance

Shares in telecoms group Cable & Wireless (CW-) were struggling today after the group revised down its full-year earnings guidance.

It blamed the move on a poor economic environment in the Caribbean which saw fewer tourists visiting the area. However, the consolidation of Dhiraagu, its business in the Maldives, in the second half helped to brighten the picture.
 
Its EBITDA guidance for it International division the year to 31 March has been reset to between $880 million and $900 million from $935 million.
 
In contrast, it froze earnings guidance of £430 million for its Worldwide business where EBITDA rose to £205 million for the six months to 30 September from £142 million for the same period in 2008.

Richard Lapthorne, chairman of C&W says: "Worldwide's performance in the first half of 2009/10 - growing market share and order book, winning new customers, strengthening its customer service and generating over £200 million of EBITDA  -- says much about how well positioned it is for the future."

The UK's second largest telecoms group is now pressing ahead with its demerger plans which will see it split into two companies Worldwide and CWI.

This was mooted earlier in the year but was then put on hold due to volatile market conditions.

Lapthorne says: "As a result of the emerging signs of more settled conditions in financial markets, we are now moving forward to list the two businesses as independent, publicly-quoted companies.

"The board believes that a demerger is the right structure to drive further growth and value for shareholders by enabling both businesses to pursue their strategies independently, and it is keen to push ahead as quickly as possible."

Watch iBall TV's take on Cable & Wireless to see what the city without a suit makes of the telecoms group.

It intends to release further information on the demerger before the end of November including an outline of the expected timetable.

C&W is still finding times tough in the downturn with results for the six months to 30 September just about hitting the mark. Revenue rose 13% to £1.86 billion - below forecasts of £1.95 billion while pre-tax profit climbed 42% to £163 million.

The interim dividend has been increased by 12% to 3.16p. The company expects total dividends for the year to be 9.5p.

Shares in the group were down more than 7% to 137.4p.