Cable & Wireless to demerge

Continues unpacking dotcom legacy

The split will create two companies: Worldwide, offering business communications across Europe, Asia and the United States; and International, providing fixed-line and mobile services in the Caribbean, Macau, Panama and others.

"As a result of the emerging signs of more settled conditions in financial markets, we are now moving forward to list the two businesses as independent, publicly-quoted companies," said Richard Lapthorne, chairman of C&W.

"The board believes that a demerger is the right structure to drive further growth and value for shareholders by enabling both businesses to pursue their strategies independently, and it is keen to push ahead as quickly as possible."

The news may help offset C&W's announcement that it had also cut its forecast for earnings before interest, tax, depreciation and amortisation at International due to the deteriorating Caribbean economy.

"We are resetting our full year CWI EBITDA guidance in the range of $880 million to $900 million, a net reduction of $35 million to $55 million," it said.

Earnings for the group were revised down to a range of £989 million to £1bn, from an earlier target of £1.03bn.

For the first half, C&W posted group EBITDA of £463 million, up 30 per cent and ahead of a Reuters poll expecting £454 million, while revenues missed forecasts at £1.86 bn, compared to a forecast of £1.92 bn.

BofA Merrill Lynch analyst Wilton Fry said the earnings performance helped hide the "terrible revenue picture".

- Reuters

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