21st May 2014 10:20
LONDON (Alliance News) - Cable & Wireless Communications PLC Wednesday said it swung to a pretax loss in its last financial year as it booked higher expenses for its restructuring and cost reduction programme and as growth in mobile, broadband and TV revenue failed to offset declines for its fixed-line and data operations.
Its new Chief Executive pledged to do more to streamline and improve the business, launching a USD250 million three-year investment programme that will push up capital expenditure to USD1.05 billion in the three years to the end of March 2017.
The company, which operates in the Caribbean, Panama and, until last month, Monaco, reported a pretax loss of USD70 million for the year to end-March, compared with a USD27 million profit a year earlier, as revenue declined to USD1.87 billion, from USD1.94 billion, and exceptional expenses rose to USD241 million, from USD136 million.
The company said its like-for-like revenue, which is adjusting for a change in accounting following the outsourcing of the company's LIME directory business and the sale of Afinis in Africa, was down 1% on the year.
The increased costs were largely down to redundancy payments, as it cut more than a third of its employees, or 1,240, in the Caribbean.
It said it had cut operating costs by USD43 million during the last financial year, meaning it exited the year with cost savings of USD77 million after year two of its three-year programme. It has targeted operating cost savings of USD100 million by the end of 2014/15.
The company has been going through a major restructuring programme, slimming down its geographical spread by selling business in places like Macau and the Seychelles, restructuring in its main Caribbean and Latin American markets, and cutting costs.
New CEO Phil Bentley joined the company at the start of 2014, and last month sold its 55% stake in Monaco Telecom in a deal worth EUR321.8 million.
He said it was clear the business is still trading below its full potential, and would look to cut more costs as well as invest to try and turn around the continuing decline in revenue.
"Although the rate of decline in fixed line voice is slowing, growth in our broadband and TV offer has been disappointing and our cost base remains uncompetitive. We have therefore developed a new strategic plan to drive top line growth, reversing our historical revenue decline, to leverage our existing networks enhanced by the USD250 million increased investment of Project Marlin; and to drive further operating efficiencies across the portfolio," Bentley said in a statement
The company's targets for the investment programme include producing "modest" revenue growth, reversing the now historic declining trend; mid-to-high-single-digit compound annual growth in earnings before interest, tax, depreciation and amortisation, driven by higher revenue and cost cuts; incremental return on invested capital; and improvements in its network quality, customer service and "added-value products".
The company said the outlook for its markets in the current financial year is mixed, with gross domestic product growth predicted to be as high as about 8% in Panama, to no growth in Barbados.
It said it still believes increasing penetration of smartphones, broadband and TV offers it good growth opportunities, but it warned it is facing tough competition, including the likely challenge of a second mobile operator in 2014 in The Bahamas, its second largest market.
"Looking ahead, we expect to make good progress in reducing our cost base, particularly in the Caribbean. Through Project Marlin, with its associated uplift in capex, we expect to capture the growth opportunity offered by mobile data, broadband and TV, reversing the historical decline in revenue. Key to achieving this goal will be the competitiveness of our offers combined with the quality of our service, both of which we expect to improve following our investments to increase network reliability and speeds," the company said.
It left its dividend for its last financial year unchanged on the previous year at USD4 cents a share, after saying it will pay a final dividend of USD2.67 cents a share
Cable & Wireless Communications shares were up 0.6% at 54.73 pence Wednesday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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