Cable & Wireless is set for a showdown with investors at its annual general meeting today after revealing that sales have fallen in the past three months.
The telecoms company, which posted a £6.5bn loss last year, will face shareholders who are angry at a share deal for its non-executive directors. As part of their contract, the directors must, with their own funds, buy up to 100,000 Cable & Wireless shares in June 2004, 2005 and 2006. The company says this is to "align their interests with that of shareholders", but a number of institutional shareholders believe the share purchases will make the independence of the non-executives questionable.
The Association of British Insurers has voiced serious concerns. "There seems to be some confusion. These are not share options. They must buy them either at the price on 4 June 2003 or at the price at the time, whichever is the lower. The cost of buying the shares may well outstrip the fees they earn," a spokesman for the company said yesterday.
Francesco Caio, chief executive of Cable & Wireless, said the company was "making progress" in its plans to turn around its finances. This includes restructuring the UK business with the loss of 1,500 jobs and exiting from the US. "I am confident that they will deliver value over time," Mr Caio said.
"It is, however, inevitable that the performance of the group, particularly in the early stages of a challenging turnaround, will have its ups and downs."
He added that revenues had fallen 2 per cent in the past quarter to £974m. Sales in the UK have remained steady, a better outcome than had been expected, but revenues in the Caribbean have seen a decline. The company has now launched a mobile telecoms service in Jamaica to help it compete in a liberalised Caribbean market.
Mr Caio was also able to tell investors that the company had reduced borrowings by £600,000 in the past three months to make its outstanding debt £1.04m.
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