Final Results

ANNOUNCEMENT

27 May 2010

CABLE & WIRELESS COMMUNICATIONS PLC

RESULTS FOR THE year ENDED 31 march 2010

EBITDA is defined in the footnotes on the following page, a reconciliation of EBITDA is provided on page 23

On 26 March 2010 Cable and Wireless plc established Cable & Wireless Communications Plc on the demerger of Cable & Wireless Worldwide. The results for the financial year 2009/10 for Cable & Wireless Communications consist of items relating to the underlying operating performance previously reported as Cable & Wireless International, or CWI, and other items relating to the full year costs associated with the former Central operations of Cable and Wireless plc which have been assumed by Cable & Wireless Communications as part of the demerger process. The results for Cable & Wireless Worldwide up to the date of demerger have been presented as discontinued operations.

Commenting on the Group results, Sir Richard Lapthorne, Chairman of Cable & Wireless Communications Plc, said:

"This has been a significant year for the Group. In March, we successfully completed the demerger which was a culmination of the work we commenced in 2006 when we created two distinct operating businesses under the Cable & Wireless umbrella. In splitting the two businesses we allow both groups to pursue their strategies independently with greater flexibility, thereby creating two companies with distinct investment profiles. We wish the Worldwide team well.

"Turning to Cable & Wireless Communications, it has been a challenging year with particularly difficult economic conditions facing us in the Caribbean. However, three of our regions have performed well and I am pleased that we can report EBITDA of US$908 million from the businesses and that we continue to generate strong cash flows highlighting the underlying strength of our Group. We still face challenges, but we have good market positions, a strong management team and a solid financial foundation to take the business forward.

"At the time of the demerger we announced that the Board of Cable and Wireless plc would recommend a final dividend of 6.34p taking the full year dividend to 9.5p per share. It was further announced that the final dividend would be split between Worldwide and Communications. Consequently your Board is recommending a final dividend of 3.34p per share for the financial year 2009/10."

Tim Pennington, Chief Financial Officer of Cable & Wireless Communications Plc added:

"It has been a challenging and busy year for us. CWI produced EBITDA of US$908 million, which met the profit forecast contained within the demerger prospectus. For reporting purposes this figure is reduced by US$42 million to US$866 million incorporating a full year of Central costs, which represent the headquarter costs of the former Cable and Wireless plc. One of the benefits of demerger is that we can slim these costs down and I would expect them to be closer to US$25 million next financial year."

Analysis of Group results

Unless specified, all commentary refers to the results and position of the continuing operations of Cable & Wireless Communications. This represents the trading operations of what we formerly referred to as Cable & Wireless International, or CWI, together with the Cable and Wireless plc head office functions previously reported as Central. The results of Cable & Wireless Communications have been reported in US dollars as this reflects the source currency of the majority of our income. There is limited commentary of the Cable & Wireless Worldwide, or CWW, results in this press release.

Operating profit before exceptional items for the Group at US$550 million reflected the lower operating EBITDA, a higher depreciation charge due to accelerated depreciation in Jamaica and lower joint venture income as our Maldives business moved to become a consolidated subsidiary.

Profit for the year from continuing operations was US$263 million.

Subsequent to demerger, the Cable & Wireless Worldwide Group is no longer part of the Cable & Wireless Communications Group. As such, the results for this business up to the date of demerger, 26 March 2010, have been presented as discontinued operations. Further details are provided on pages 23 to 24 of this release.

The table above shows the comparison of the 2009/10 reported revenue, gross margin, other operating costs and EBITDA for Cable & Wireless Communications to that reported for CWI as part of Cable and Wireless plc 2008/09 results. In 2009/10 Cable & Wireless Communications reported EBITDA of US$866 million after Central costs and CWI reported EBITDA of US$908 million. From October 2010, our Maldives business was consolidated as a subsidiary and added US$45 million to EBITDA. On a like-for-like basis, adjusting for the consolidation of the Maldives and at constant currency, EBITDA for CWI was 4% lower than last year.

At our guided exchange rates for 2009/10, EBITDA was US$890 million for CWI, in line with our forecast of US$880 - 900 million.

REVIEW OF CWI OPERATIONS

"We have delivered a good result in what has been a difficult period for all telecommunications companies around the world.

"Panama has withstood the initial challenges of two new mobile entrants and continues to perform well, with EBITDA increasing by 3% during the year to its highest level ever. Macau saw wide in-year swings in GDP growth from the economic crisis and the impact of visa restrictions on visitor numbers but it also achieved its highest ever EBITDA at US$142 million which came at a margin of 45%. The Caribbean is facing its most difficult economic conditions in a generation and this has been reflected in the results. The region has stabilised with second half performance broadly in line with the first half but the near term economic outlook is still uncertain. During the year we took control of Dhiraagu in the Maldives which gave our business in Monaco & Islands further critical mass increasing EBITDA to US$174 million.

"Overall EBITDA of US$908 million from CWI represents a margin of 39% with EBITDA improvements in three of our four businesses.

"Our businesses are well positioned for the future with leading positions in attractive markets allowing us to put communications at the heart of the nations we serve."

REVIEW OF CWI OPERATIONS

CWI income statement

Panama

Cable & Wireless Panama continues to be the market leader in mobile, broadband and fixed line services in its domestic market. Despite more intense competition, this is a year when we have delivered record EBITDA.

Total revenue at US$621 million decreased by 7% compared to last year.

The entrance of two new mobile operators resulted in a market characterised by high levels of promotional activity. This caused fluctuations in prepaid subscriber numbers as well as decreased ARPU. However, on average subscriber numbers per month were 14% higher during the year and market leadership was maintained. Mobile revenue at US$303 million was marginally above the prior year.

Broadband revenue performed well at US$46 million, an increase of 12% from last year as we grew our subscribers by 13% and broadly maintained ARPU.

In December 2009, Pay TV was successfully launched enabling Cable & Wireless Panama to provide a "triple play" offer together with broadband and fixed voice. As at 31 March 2010, 12,600 subscribers had signed up to the service and the network had passed 95,000 homes. We continue to expand our network footprint.

International voice revenue declined by 15% to US$34 million and domestic voice by 14% to US$137 million, driven by a slowdown in the economy and substitution effects which especially affected payphones.

Earlier in the year some major projects were delayed, causing enterprise, data and other revenue to decrease by US$24 million, or 19%, to US$101 million. Of this decrease, US$18 million was in the first half of the year and US$6 million was in the second half. Contract wins included installing a WAN network for the customs department, internet access for schools in remote areas and CCTV for the national police in Panama.

A change in revenue mix combined with initiatives to reduce costs of sales limited the reduction in gross margin, which at US$433 million was 2% lower than last year. Gross margin as a percentage of revenue improved to 70% from 66% last year.

Operating costs decreased by 9% to US$150 million due to tight cost management, primarily in the areas of staff, utilities and professional fees and due to lower marketing costs as compared to the higher spend in 2008/09 in anticipation of new mobile competition.

EBITDA was 3% higher than last year at US$283 million and EBITDA margin improved by 5 percentage points to 46%, slightly higher than the 6 months to September 2009.

  Caribbean

Trading in our Caribbean operations proved challenging throughout the year with tourist arrivals down in most of the region resulting in declining GDP and increasing unemployment.

Revenue decreased 10%, or US$102 million, to US$873 million, with US$46 million of the decline due to currency depreciation in Jamaica.

We held our mobile market shares but ARPU fell by 16% as competition in a difficult economic environment led to increased bundled minutes, discounting and more on-net traffic. As a result, mobile revenue fell 9% or US$33 million to US$321 million with US$10 million of this due to depreciation of the Jamaican dollar.

Broadband revenue grew by 5% on a constant currency basis to US$92 million driven by a 6% increase in subscribers but the impact of currency depreciation transformed this into a 1% decline on a reported basis.

International voice revenue fell 30% to US$75 million due to reduced economic activity and continued substitution effects. Domestic voice revenue decreased by 17% or US$46 million to US$230 million, US$20 million of which was due to currency depreciation. Overall, subscribers reduced by 4% and ARPU decreased by 15% as a result of lower usage per subscriber.

Enterprise, data and other revenue increased by 7% to US$155 million.

Due to lower revenue, gross margin fell by 10% to US$646 million. We maintained gross margin as a percentage of revenue at 74% due to a change in fixed line traffic mix which was offset by a fall in mobile margin due to increased discounting.

Operating costs of US$376 million were 1% lower than 2008/09. Prior year results benefitted from a number of one-off items such as pension credits from the Jamaica business.

The reduction in EBITDA of 20% to US$270 million reflects the revenue decline and an adverse foreign exchange impact of US$12 million. EBITDA margin remained stable at 31% throughout the year although this represented a decline from the prior year due to the downward pressure on revenue.

Our proportionate ownership of Caribbean EBITDA for the year to 31 March 2010 was 89%.

Macau

Our operation in Macau had its best ever year, increasing EBITDA by 2%, despite economic volatility.

Revenue increased by 5% to US$316 million.

Mobile revenue increased by 11% to US$130 million driven by an increase in mobile broadband and wholesale mobile equipment sales. However, subscribers were 3% lower and competition drove ARPU 19% lower to US$17.

Broadband revenue grew by 5% to US$45 million as subscribers continued to demand greater bandwidth.

International voice revenue declined 14% to US$49 million in the period reflecting the economic environment and outages to the SMW3 cable during the year. Domestic voice revenue at US$33 million was only marginally lower than last year. Voice subscribers were broadly flat in the year, but lower usage of international calls due to economic factors and substitution effects resulted in an 8% drop in ARPU.

Enterprise, data and other growth of 16% to US$59 million was driven by an increase in leased line services reflecting signs of recovery in the entertainment industry and government spending in managed services, as well as higher demand from carriers and the banking sector.

Gross margin at US$191 million was broadly flat with last year.

Operating costs were US$49 million, 8% lower than last year. Our continued cost control plus a reduction in royalty fees related to the fixed line operating agreement reduced operating costs as a percentage of revenue to 16%, from 18% in 2008/09.

The EBITDA increase of 2% to US$142 million represents improved operating cost control. The EBITDA margin was 45%.

Monaco & Islands (M&I)

In October 2009, we increased our shareholding in Dhiraagu, our business in the Maldives, to 52%, and the business has been consolidated since then. This has added US$69 million to revenue and US$45 million to EBITDA in 2009/10. Operations in the Maldives, Monaco and Guernsey represented approximately 76% of Monaco & Islands revenue and approximately 84% of EBITDA in H2 2009/10.

Revenue increased 9% to US$552 million primarily reflecting the contribution of the Maldives operations.

Mobile revenue increased by 32% or US$43 million to US$177 million. The Maldives contributed US$48 million of the increase and all business units grew as a result of higher subscribers, except Guernsey where we maintained our market leadership but suffered a decrease in ARPU due to the increasingly competitive environment. As a result of the relatively lower mobile ARPU in the Maldives, mobile ARPU for Monaco & Islands decreased by 38%.

Broadband revenue increased by 27% to US$28 million driven by growth in the Seychelles as the business continued to add subscribers and increase ARPU, and by the consolidation of the Maldives.

Fixed line domestic revenue at US$52 million increased by 6%, mainly due to the consolidation of the Maldives. International fixed line revenue at US$39 million decreased by 9% where the Maldives added an additional US$5 million but the remaining businesses declined, in part due to currency fluctuations and the global trend of substitution effects.

Enterprise, data and other revenues decreased by 1% to US$256 million. The Maldives added part of the increase whilst growth in the data centre business in Guernsey and enterprise sales in Bermuda added further. This was partially offset by the loss of international transit traffic from Roshan in Afghanistan and a negative currency impact of US$9 million.

Gross margin at US$352 million increased by 15% with the Maldives adding US$58 million and the effect of foreign exchange rates reducing this by US$17 million. Gross margin as a percentage of revenue improved by 4 percentage points to 64%, the addition of the Maldives contributing 3 percentage points and revenue mix improvements the remainder.

Operating costs at US$178 million increased by 6% with the Maldives adding US$13 million as well as additional one off restructuring costs in Bermuda and Connecteo, partially offset by a positive foreign exchange impact of US$10 million.

EBITDA at US$174 million is 27% higher than the prior year. Excluding the Maldives, EBITDA was US$129 million which was broadly in line with last year at constant currency. If the Maldives had been included for a full year in both 2008/09 and 2009/10, at constant currency, EBITDA would have been 3% higher. Our proportionate ownership of Monaco & Islands EBITDA for the 6 months to 31 March 2010 was 67%.

Other includes CWI's management, royalty and branding fees, the costs of the CWI London head office, CWI's net defined benefit pension charge and intercompany eliminations. EBITDA of US$39 million was US$7 million higher than last year and included the release of legal provisions of US$17 million after re-assessing the risk of loss due to these claims.

Our share of profit after tax from joint ventures was US$30 million, down from US$60 million in 2008/09. This includes our share of the Maldives until October 2009, when Cable & Wireless Communications increased its ownership to 52% from 45% and the Maldives business was accounted for as a subsidiary.

Our share of TSTT profits declined by US$11 million due to increased depreciation and the increased cost of delivering additional bandwidth to service demand and new services. Our share of losses in Roshan remains unchanged from the prior year due to equipment write offs in both years although mobile revenue and customer growth continued and ARPUs were maintained. Fintel, in Fiji, was impacted by a decline in fixed voice services and increases to termination rates, resulting in our share of revenue and profit after tax declining by US$2 million and US$3 million, respectively, from last year.

Capital expenditure was US$310 million, an 8% reduction from the prior year and just over 13% of revenue. Our principal investments were customer driven increases in capacity and coverage footprint for our 2G/2.5G GSM mobile networks, our fixed broadband networks and our 3G/3.5G mobile broadband networks. In Panama, we have invested capital to introduce a digital Pay TV network, complementing our existing lines of service. Capital expenditure in 2010/11 is expected to be approximately US$350 million.

Depreciation and amortisation at US$348 million was US$54 million higher than 2008/09 driven by an impairment of goodwill in Connecteo and additional charges in Jamaica.

A review of operations for the Connecteo business, a subsidiary of Monaco Telecom developing VSAT and WiMax operations in 6 African countries, resulted in lower expected future cash flows and a consequent US$11 million impairment of goodwill.

Additional depreciation and asset obsolescence charges of US$41 million were recorded during the year in Jamaica due to a review of useful economic lives of assets, reflecting the continuing transformation of the network.

OTHER GROUP ITEMS

The LTIP charge for Cable & Wireless Communications for 2009/10 was US$1 million.

At 31 March 2010, Cable & Wireless Communications had an LTIP pool of US$32 million (£22 million) whilst total payments made over the life of the scheme to 31 March 2010 were £18 million. On 1 April 2010, a payment was made under the scheme to participants totalling US$10 million (£7 million) which compares to a payment of US$3 million (£2 million) made in April 2009.

Net exceptional charges relating to operating items of US$82 million and a non-operating credit of US$12 million were incurred during the year.

For CWI, net exceptional charges from operations fell from US$87 million in 2008/09 to US$43 million with a cash impact of US$67 million. The CWI exceptional cost consists of restructuring programmes of US$34 million, predominantly related to the "One Caribbean" transformation and US$9 million of legal fees incurred in successfully defending claims by a Caribbean competitor, Digicel, in the UK High Court. The One Caribbean programme is now largely complete whilst Cable & Wireless Communications has recently been awarded its costs in the Digicel case and expects to recover the majority of the costs incurred to date.

A further US$39 million of exceptional costs related to the demerger. These included professional fees of US$26 million, redundancy costs of US$4 million and transition and closure costs of US$9 million. All the exceptional costs for demerger have been booked in this financial year.

The non-operating exceptional net gain of US$12 million represents US$19 million of mark to market gains on forward contracts entered into in respect of 2009/10 US dollar repatriation, net of previously capitalised finance costs of US$7 million expensed on the cancellation of related facilities that were replaced prior to demerger.

Net finance expense

The US$96 million net finance expense for the Group is US$35 million higher than 2008/09 and consists of finance income of US$23 million (US$46 million in 2008/09) and finance expense of US$119 million (US$107 million in 2008/09). The decrease in finance income relates to reduced interest rates and lower average cash balances. Interest expense increased year on year due to a higher average level of borrowings and the replacement in February of floating rate debt with a fixed rate US dollar denominated Bond.

CWI had a finance charge of US$38 million primarily in respect of debt in Panama and interest payable on the put option in respect of our Monaco business, offset by interest income of US$11 million mainly from cash balances held in Macau and Monaco & Islands to give a net finance charge of US$27 million compared to a net finance charge of US$35 million in the previous year.

Income tax expense

The tax charge of US$120 million for continuing operations (US$88 million for 2009/10) is in respect of overseas taxes. The increase of US$32 million is principally due to a reduction in credits arising from the settlement and re-estimation of prior year tax items. The effective income tax rate for Cable & Wireless Communications in 2010/11 is expected to be in the range of 25% to 29%.

Group cash flow1

Cable & Wireless Communications generated operating cash flow before exceptionals of US$556 million in 2009/10 after investing US$310 million in capital expenditure.

The outflow from movements in working capital and provisions of US$50 million included working capital outflows in the regions mostly due to the timing of receipts and payments. In London, US$17 million of legal provisions were released during the year, including a US$9 million provision reported in the six months to September 2009.

Investment income of US$52 million included US$30 million of dividends received from joint ventures and US$7 million of interest received from third parties with the remaining balance relating to the release of Central cash collateral for CWW trading contracts.

Fixed charges

We paid US$110 million relating to income tax in 2009/10, interest of US$105 million on our external financing and dividends to non controlling interests of US$156 million. The dividends to our shareholders of US$268 million reflect payments to shareholders of Cable and Wireless plc. Based on our expected dividend of 8.0 US cents per share for 2010/11 and the number of shares outstanding at 31 March 2010, the dividend payable to our shareholders in 2010/11 would be approximately US$207 million.

One-off items and exceptionals

The net cash flow included a US$72 million outflow for exceptional items, US$52 million of which related to restructuring charges associated with business transformation, primarily the 'One Caribbean' programme. A further US$5 million related to central restructuring costs and the balance mostly related to legal fees for the Digicel litigation.

The inflow from acquisitions and disposals of US$36 million principally arose as cash consolidated from the Maldives business exceeded the purchase price paid for the additional shares.

The LTIP payment in the year amounted to US$3 million in respect of the period to 31 March 2009, and we made a contribution to the pension fund of US$43 million of which US$40 million was agreed with the pension Trustees prior to the demerger.

Group cash and debt

Cable & Wireless Communications has obtained new financings and facilities in 2009/10 totalling US$1.1 billion:

·; Three year bank facilities of US$600 million (comprising a US$500 million revolving credit facility and a US$100 million term loan) with margins of between 3.25% and 4.00% over LIBOR. These facilities were undrawn at 31 March 2010.

·; A US$500 million seven year bond with a coupon of 7.75% placed with investors in Europe and the United States.

In the year, Cable & Wireless Communications repaid its existing US$415 million facility.

Pensions

As at 31 March 2010, the defined benefit section of the Cable & Wireless Superannuation Fund ("CWSF") had an IAS 19 deficit of US$165 million (£111 million), compared to a deficit of US$46 million (£32 million) as at 31 March 2009. The movement in the scheme's deficit resulted primarily from a reduction in the discount rate used to value the scheme's liabilities. The AA corporate bond rate used in the IAS 19 valuation was 5.5% compared with 6.7% last year. The deficit of US$165 million is recorded after the transfer of obligations to Cable & Wireless Worldwide which reduced the IAS 19 deficit attributable to Cable & Wireless Communications by US$211 million.

At the time of the demerger, Cable & Wireless Communications agreed with the trustee of the scheme to provide:

·; A US$40 million (£25 million) cash injection into the CWSF which was paid on 31 March 2010. This special contribution reflected the costs of de-risking the investment strategy, consistent with the reduction in average duration of the scheme's liabilities as a consequence of the split of membership on demerger. This amount is in addition to Cable & Wireless Communications' agreed share of the July 2009 interim funding agreement whereby Cable & Wireless Communications will pay £9 million into the existing scheme in October 2010 and a further £20 million in April 2011.

·; A contingent funding agreement under which the trustee can call for a letter of credit or cash escrow of £100 million in certain circumstances, such as material deterioration in the financial performance of the business.

The next triennial valuation of the scheme is due as at 31 March 2010. Cable & Wireless Communications has agreed that the funding plan for any deficit arising from that valuation will end no later than April 2016.

The fund assets at 31 March 2010 were approximately invested 76% in the bulk annuity policy, 12% in equities, and 12% in bonds, property, swaps and cash.

There are unfunded pension liabilities in the UK of US$34 million (£23 million), (US$28 million (£19 million) at 31 March 2009). Other schemes in Cable & Wireless Communications have a net IAS 19 surplus of US$7 million (US$11 million deficit at 31 March 2009).

Dividend

At the time of the demerger, we announced that payment of the final dividend for Cable and Wireless plc of 6.34 pence per share would be allocated between Cable & Wireless Communications and Cable & Wireless Worldwide, with Cable & Wireless Communications proposing a dividend payment of 3.34 pence per share and CWW a dividend payment of 3.00 pence per share. The final dividend of Cable & Wireless Communications Plc will be paid on 12 August 2010 to ordinary shareholders on the register at the close of business on 11 June 2010.

For 2010/11 and beyond, Cable & Wireless Communications will declare its dividends in US dollars. From this date, shareholders will receive their dividend in sterling unless they elect to receive it in US dollars.

For 2010/11, the Board of Cable & Wireless Communications has confirmed that, subject to financial and trading performance, it expects to recommend a dividend of 8.0 US cents per share (approximately 5.6 pence per share). Beyond 2010/11, it intends to pursue a policy of dividend growth that reflects the underlying earnings and cash flow of the business.

A scrip dividend scheme will be offered in respect of the final dividend, subject to shareholder approval at the Annual General Meeting, to be held on 21 July 2010. Those shareholders who hold their shares in certificated form and have previously elected to join the scheme will automatically have the final dividend sent to them in this form. For shareholders who hold their shares through CREST, a new CREST Dividend Election Input Message will be required. Shareholders wishing to join the scheme for the final dividend (and all future dividends) should make an election using CREST Input Message or return a completed mandate form to: Equiniti Ltd, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA by 19 July 2010. Following despatch to shareholders, copies of the mandate form, and the scrip dividend brochure, will be available from Equiniti Ltd. UK callers: 0871 384 2104; overseas callers: +44 (0)121 415 7047 or from our website www.cwc.com.

Contacts

Appendices

Extracts from the financial statements and additional information:

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Reconciliation of net profit to net cash flow from operating activities

Additional information

Operating performance information

2009/10 CWI constant currency results detail

H2 2009/10 CWI reported results detail

H2 2009/10 CWI constant currency results detail

Exchange rates

Extracts from the financial statements and additional information

Consolidated income statement

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity