It is also developing a range of wireless technologies with a view to building radio-based local telephone networks, avoiding interconnection payments to BT.
Mike Harris, C&W's director for the UK and Europe, said: 'We have invited entrepreneurs in entertainment and information services to work with us. ' The company will approach entertainment and software companies, possibly taking equity stakes.
C&W disclosed a 35 per cent increase in interim pre-tax profits to pounds 509m from pounds 378m a year ago. The increase was despite a pounds 20m loss on a marine cabling project in the North Sea and a return to pension contributions in the UK. The net pension charge, relating mainly to Mercury, was pounds 5m compared with a net credit of pounds 5m in the same period last year.
Lord Young, chairman of C&W, said performance had been strong in almost all operations and earnings had been helped by favourable currency movements. 'The strength of our performance is all the more pleasing against the background of the increasingly competitive nature of our markets, with substantial price reductions implemented by Mercury and Hong Kong Telecom,' he said.
Group turnover rose by 34 per cent to pounds 2.3bn in the six months to 30 September. Earnings per share rose 23 per cent to 11.1p and the interim dividend increased by 9 per cent to 2.6p. Lord Young said the long-term aim was double-digit growth in earnings per share on a currency neutral basis. He added: 'No doubt dividends will follow that.'
The operating profit of Hong Kong Telecom, in which C&W has a 57.5 per cent stake, rose to pounds 357m in the first half from pounds 250m a year earlier. Turnover rose to pounds 1.01bn from pounds 715m, helped by a 32 per cent increase in traffic with China.
Operating profit in the UK and Europe fell 18 per cent to pounds 83m after taking account of the marine group's loss and the pension fund charge. Turnover in the region rose 27 per cent to pounds 824m. The figure includes Mercury Communications, which saw operating profit rise 5 per cent to pounds 99m on turnover up 24 per cent to pounds 701m.
Mercury will benefit in the second half of the year from a more favourable interconnection deal with BT, backdated to June 1992. Mercury has also won a pounds 20m contract, doubling in five years, to provide a telecommunications system to British police forces.
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