Cable & Wireless halts demerger plan

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Cable & Wireless (C&W) has confirmed that its planned demerger of its Europe, Asia and US division is being shelved for now due to weak economic markets.

The news came as the company revealed its half-year interim half year results.

“Whilst our trading position is in good health, the same cannot be said of the financial markets which are extremely volatile and which currently provide no basis for proper financial planning,” said C&W chairman Richard Lapthorne.

“Consequently, we have postponed a final decision on value realisation until we can foresee a sustained period of normality returning to the financial markets.”

Despite delaying the demerger plan, the company revealed a five per cent rise in revenue year-on-year to £1.6 billion. Earnings before exceptional items, interest, tax and depreciation were up 26 per cent to £357 million for the same period.

C&W completed its acquisition of Scottish telco Thus last month and today confirmed that it expects to achieve capital expenditure savings of £82 million from the combined business by 2011/12. However, it expects to incur total costs of £78 million to integrate the Thus operations.

“We acquired Thus on 1 October and integration is moving ahead at speed – we’ll see some of the early benefits of that work in the second half, with much more to come next year,” said John Pluthero, executive chairman of C&W’s Europe, Asia and US business.

“The work we’ve done over the past two years has positioned us well for any type of downturn – we have a high proportion of long-term contracted revenue, a powerful product portfolio and a large market to shoot for. On top of which we still have costs to take out of the business and the synergy benefits of the Thus acquisition,” he added.

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