Cable & Wireless to raise pounds 1bn by selling off holdings

Click to follow
The Independent Online
Cable & Wireless yesterday pledged to raise pounds 1bn over the next 12 months by selling businesses which it does not control. As Cathy Newman reports, C&W is spoilt for choice on what to dispose of first as it has holdings of 20 per cent or less in 50 companies world-wide.

Analysts said there were three businesses in particular that C&W would aim to sell. They reckon it could raise pounds 450m from selling Bouygues Telecom, a French cellular telephones business; pounds 100m from its stake in MTN, a South African cellular operation; and up to pounds 1.2bn from Japanese cellular companies in markets such as Tokyo.

Robert Lerwill, finance director, said: "We will only continue to invest in companies we can get significant influence or control over."

C&W will continue focusing on Asia and Australia, the Caribbean and Central America, the US, the UK and parts of Europe. The company is however set to scale down its presence in Latin America and Africa.

Profits before tax and exceptional items were up 9 per cent at pounds 797m, above analysts' expectations. As a result, the shares were hardly affected by sharp falls on the stock market. They closed just 7p down at 478p.

"We have been looking for double-digit growth from all our businesses and we've achieved that," Mr Lerwill said. He added that the figures were particularly pleasing, despite the negative impact of currency movements.

During the period, C&W spent pounds 1.6bn on acquisitions in Panama and Australia, and on its continuing programme of capital expenditure.

Mark Lambert, telecoms analyst at Merrill Lynch, said Dick Brown's work since he was appointed chief executive just over a year ago had been encouraging. "The strategic image of C&W is building," he said. "The work Dick Brown has done and is telling us that he will do is encouraging to shareholders."

However, he added that C&W still faced problems because of the strong pound and the turbulence in the Far Eastern markets.

Some analysts were more positive, though. John Clarke, telecoms analyst at Daiwa Research Institute, said: "This is a company that's recovered its self-confidence. I and other analysts will be upping our forecasts despite the rise of the pound."

Yesterday's news was also accompanied by an announcement that Dr Brian Smith, chairman, would retire after the annual general meeting in June next year. He is to be succeeded by Sir Ralph Robins, who is chairman of Rolls-Royce and has been a non-executive director of C&W for three years.

Dr Smith has overseen the company through a difficult period of transition after the joint departure last year of Lord Young and James Ross as chairman and chief executive respectively. He said yesterday: "With Dick Brown and his new team now very well established, and the future clearly mapped out, I believe the time is right for me to prepare the way for my successor."

During the past six months, Mr Brown's strategic overhaul has resulted in several big deals. C&W's position in the UK has been boosted with the launch of Cable & Wireless Communications via a four-way merger of Mercury Communications, Nynex, Bell Cablemedia and Videotron.

The interim dividend, up 10 per cent at 3.75p, will be paid as a Foreign Income Dividend (FID).

Investment column, page 27

Comments