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C&W beats forecasts
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November 15, 2000: 10:15 a.m. ET
UK telecom firm says half-year profit little changed amid focus on Internet, data
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LONDON (CNNfn) - Cable & Wireless PLC said Wednesday increasing income from its high-speed data transfer business offset lower revenue from its Hong Kong unit and other discontinued operations in its fiscal first half-year, leaving overall profit at the U.K. business telecom operator little changed from a year earlier.
Profit before tax, exceptionals and goodwill amortization for the six months ended Sep. 30 came in at £537 million ($773 million), a 0.4 percent dip from £539 million a year earlier. Analysts had expected around £487 million, Reuters reported.
Australian-based unit Cable & Wireless Optus Ltd., the country's second-biggest telecom firm, put itself up for sale earlier Wednesday, saying it was inviting bids for parts or all of its assets.
Cable & Wireless Chief Executive Graham Wallace told reporters his firm, which has a 52.5 percent stake in Optus, would like to own 100 percent of the Australian data and business services division.
Analysts expect Optus to sell its cable-TV and mobile-phone operations. Cable & Wireless could end up with proceeds of £1.9 billion after Optus sells those divisions and the U.K. telecom firm buys the outstanding stake in the business services division, analysts said.
 Cable & Wireless (CW-) shares surged 5.4 percent to 896 pence after hitting a high of 913.75 pence.
Earnings before interest, tax, depreciation, and amortization (EBITDA) fell to £1.10 billion from £1.28 billion in the first half of 1999. Telecom companies often report EBITDA to reflect the progress of their underlying business, excluding gains from sales of part of their assets, for example.
Overall revenue fell 2 percent to £4.43 million, while sales from Cable & Wireless' continuing operations rose 15 percent to £3.43 million.
Revenue at its business Internet protocol, or high speed-data transfer, unit Cable & Wireless Global rose 20 percent to £1.94 billion. That increase was largely offset by a £225 million, or 20 percent, drop in revenue at its Hong Kong unit Cable & Wireless HKT, which it sold to Hong Kong's Pacific Century CyberWorks in August. Revenue from other discontinued operations fell 72 percent to £115 million.
Driving the growth at Cable & Wireless Global was a 45 percent surge in revenue from its Internet protocol business.
Net profit rose 11 percent to £3.87 billion. The figure included one-time profits of £4.5 billion before tax from the company's sale of Cable & Wireless HKT and the consumer operations of its Cable & Wireless Communications.
More acquisitions planned
Those deals left Cable & Wireless with a stash of £4.27 billion in cash.
Wallace told CNNfn his company plans to use the funds to acquire more small European companies working in Internet protocol.
Patrick Foulis, an analyst at investment bank UBS Warburg, said that he had hoped Cable & Wireless would have paid a special dividend or unveiled more measures to deliver value for shareholders, instead of keeping the cash in its coffers.
"We expected a bit more about what they intend to do with the cash," said Foulis. "Management seem pretty happy to leave it, but it's not a very efficient balance sheet structure."
While profit came in at the top end of the range of analysts' expectations, the company's EBITDA profit margin of 13 percent was slightly disappointing, Foulis added, saying: "It is in fact a bit lower than we would have liked to see."
Wallace told analysts the company aims to raise its EBITDA margin to 25 percent over the next three years, Foulis said.
--from staff and wire reports 
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