City warms to revived Cable & Wireless

The renaissance of Cable & Wireless from the ruins of its disastrous US expansion during the dot.com boom is close to completion, with analysts increasingly confident it will meet full-year expectations.

The renaissance of Cable & Wireless from the ruins of its disastrous US expansion during the dot.com boom is close to completion, with analysts increasingly confident it will meet full-year expectations.

After a third-quarter trading statement yesterday the company's shares rose 5.5 per cent, largely on relief there was no unexpected bad news from the telecoms company that is the UK's main competitor to BT Group.

Although there are fears that C&W will have to make further acquisitions to bolster its position in UK broadband internet provision, one of its main areas chosen for expansion, and in selected overseas markets, analysts believe the company's position, so precarious over the past few years, has finally stabilised.

Francesco Caio, the C&W chief executive, said: "The results this quarter contain no surprises and demonstrate solid progress in our transformation of the business."

The company reported that in the three months to 31 December, group revenue was down 4 per cent at £808m, although if currency fluctuations are stripped out the figure was flat. In the UK, revenue was £390m, down 6 per cent against the same period last year. The drop was mainly down to the reduced charges C&W receives from switching fixed-line calls to mobile phone networks which have fallen after intervention by Ofcom, the telecoms regulator. Underlying revenues were in line with analysts' forecasts, however.

Mr Caio highlighted the fact that trading across the group was tough but that contracts had been won in the UK with Volkswagen, Go-Ahead Group and Scottish Courage. "As anticipated, market conditions across the group remained challenging in the the third quarter, especially in the UK business segment where pricing pressure continues," Mr Caio said.

Last year C&W bought Bulldog, the provider of high-speed internet connections, and embarked on an aggressive plan to grow in the broadband market. It is using so-called local loop unbundling to connect consumers to the internet, which involves installing its own equipment in the local telephone exchanges of BT.