Half Yearly Report

ANNOUNCEMENT

7 November 2013

CABLE & WIRELESS COMMUNICATIONS PLC HALF YEARLY REPORT

FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013

Mobile revenue growth across all regions

Key Highlights

§ Group mobile revenue up 3%; growth in all regions

· Mobile data revenue up 29%

§ Panama revenue and EBITDA up 3%

· Panama licence extension and additional spectrum

§ Jamaica mobile customers up 23%

§ Progress on cost reduction programme; Caribbean operating costs down 6%

§ Completion of Macau and Islands disposals realising net proceeds of US$1.4 billion

§ Interim dividend of US1.33 cents per share

Note: Figures above are for continuing operations. EBITDA and adjusted earnings per share are defined in the footnotes on the following pages, reconciliations of EBITDA and adjusted earnings per share are provided on page 27

Commenting on the Group results, Tony Rice, Chief Executive of Cable & Wireless Communications Plc, said:

"Our first half was characterised by an impressive performance in our mobile business and good progress on our cost reduction programme. Growth in mobile revenue and EBITDA of 3% for the Group was a strong result given competition and other market challenges we faced.

"We are setting the standard for mobile data in our markets, and customers are responding. Mobile data revenue rose 29% over the half with all regions seeing growth. We are continuing to invest in mobile data, particularly in Long-Term Evolution (LTE) networks, which we launched in Monaco recently and will launch in The Bahamas and Cayman in the second half.

"We continue to improve in Jamaica, particularly in mobile where our customer base is up 23% and mobile service revenue rose 14% at constant currency during the half. We are presenting innovative products to our customers, and have successfully positioned our business as the 'value' provider, in a very price sensitive market.

"Our productivity and efficiency programme has started well. The Caribbean has been the focus with operating costs reducing by US$18 million in the first half and we expect to step up the pace in order to meet our US$100 million target. Centralising our regional operations in our new Miami office will be a key driver and I'm pleased to report we've made good progress in establishing our new regional hub.

"We have largely completed our disposal process, with the Seychelles transaction expected to complete this year. We have agreed to unwind the agreement we announced with Batelco for a minority stake in our Monaco business at the same time. Monaco remains a strong and growing operation within our Group and we are reviewing our options for the business.

"These results show our core businesses are performing well - providing a strong platform on which we can grow. As I hand over the reins to Phil Bentley, I am confident we have a business well prepared for future growth. I wish him and the rest of our excellent team the very best in delivering that future."

Outlook

We maintain the guidance given at the full year, and expect:

§ 2013/14 Group EBITDA to be similar to 2012/13

§ US$100 million cost reduction across the Group achieved on a run rate basis within two years

· Anticipated cost to deliver between US$150-200 million, of which circa US$100 million will fall in 2013/14

§ Caribbean medium term EBITDA margin target of greater than 30%

§ Targeted investment in high speed networks leading to capital expenditure of approximately US$300 million in 2013/14

§ Dividend for 2013/14 of US4 cents

Analysis of Group results

Revenue for the Group fell by 3% to US$935 million. Mobile revenue was up 3% on the prior year as increased penetration and usage drove strong mobile data growth of 29%. Fixed voice revenue continued to be adversely impacted by declining voice traffic and lower rates. Enterprise, data and other revenue declined by 10% however this was largely due to a change in accounting following the outsourcing of our LIME directory businesses - this would have been 3% lower on a like-for-like basis.

EBITDA was 3% ahead of the prior year at US$298 million as Panama returned to growth and the Caribbean achieved a 6% reduction in operating costs.

Operating profit before exceptional items was 4% lower than the prior period at US$160 million primarily due to lower associate profit from TSTT following a one-off charge in relation to a staff pay dispute.

Net profit for the year was lower at US$8 million following anticipated exceptional charges related to the Group's cost reduction activities. Adjusted earnings per share for the six months were US0.8 cents. The Board has declared an interim dividend of US1.33 cents per share, in line with our intentions outlined at the full year results in May.

The Group recognised a gain of US$1,011 million following the completed disposals of the Islands (excluding the Seychelles) and Macau businesses.

On a constant currency basis, revenue for the Group was 2% lower and EBITDA was 3% higher than the prior year.

Strategy

The disposals of our Islands and Macau businesses saw the completion of a key strategic objective, set at demerger, of creating a more focused business. The Caribbean and Latin America is now the core focus for our business, a region with favourable demographics, GDP growth rates in excess of developed markets and communications markets with low levels of data penetration. We are well placed to succeed given our leading market positions, extensive networks and connectivity, good working relationships with governments and partners and strong balance sheet. We plan to grow the business within this region both organically through investment in key growth segments such as mobile data and fibre broadband as well as through acquisitions.

In terms of organic development, we have four key strategic priorities.

1. Change operating model - De-layering management, establishing a regional office in Miami to provide support functions to our businesses putting us closer to our operations and customers.

2. Improve efficiency - We are targeting a US$100 million cost reduction across the Group achieved on a run rate basis within two years. We have also set the goal of achieving a Caribbean EBITDA margin in excess of 30% in the medium term. Group operating expenditure in the first half was US$18 million (4%) lower with the largest savings being made in the Caribbean.

3. Capture data opportunity - On-going focus on completing the transition to being a data-led telecommunications provider, capturing the growth opportunities that exist within the region. We have invested in new LTE mobile data networks in Monaco, Cayman and The Bahamas whilst also committing to rolling out a fibre network in Barbados and Cayman.

4. Lead in full service provision - We will continue to invest in and leverage our position as a leading full service operator in the Caribbean and Latin America. As a provider of mobile, fixed voice, broadband and pay TV services in several markets, we are able to provide attractive bundled product packages to our customers.

Our ambition is to grow the business as the leading full service operator in the Caribbean and Latin America, with improved margins and increased cash generation enabling greater distributions to shareholders.

Appointment of Phil Bentley

CWC recently announced the appointment of Phil Bentley as Chief Executive Officer, succeeding Tony Rice, with effect from 1 January 2014. Phil was previously Managing Director at British Gas, the UK's leading energy and services provider between 2007 and 2013. Prior to this he was Managing Director, Europe and Group Finance Director at Centrica plc and served on its Board since 2000.

Tony has decided to step down as CEO, ahead of the establishment of CWC's new regional office in Miami. He will leave the Board at the end of 2013, although will continue to provide advice to the Group on Government relations until June 2014.

Interim results presentation

Cable & Wireless Communications will hold its 2013/14 interim results presentation for analysts and institutional investors at 9:30am GMT on Thursday 7 November 2013.

The presentation will be webcast live on the Cable & Wireless Communications website www.cwc.com. An on-demand version will be available later in the day.

Contacts

REVIEW OF CWC OPERATIONS

Income statement

Panama

· Revenue and EBITDA growth of 3%

· Mobile revenue 6% higher, data revenue up 49%

· Enterprise, data and other revenue 6% higher than prior year

· Licence extension and new spectrum secured

Revenue at US$295 million was 3% higher than the same period last year as mobile growth offset a decline in fixed voice.

Mobile revenue at US$168 million was 6% higher than the prior year and 2% higher than H2 2012/13. This is the fourth consecutive period we have seen sequential half yearly mobile service revenue growth. Subscribers increased, driven by prepaid activations for data plans as more affordable smart devices entered the market. Data revenue was up 49% on the prior year more than offsetting reduced voice revenue which was affected by a lower voice rate per minute. Data penetration of subscribers increased by 7 percentage points to 33% as the wider range of data plans stimulated prepaid usage. ARPU was in line with last year but lower than the second half of last year due to a reduction in roaming traffic.

Broadband & TV revenue of US$31 million was 3% higher than last year. Broadband subscribers grew as our focus remained on the higher ARPU segment of the market and TV subscribers were also up to 41,000. Bundling of products was an effective retention tool with 80% of pay TV and broadband subscribers taking more than one service. We have extended our enterprise offering, recently announcing a contract to install managed TV solutions for the new Waldorf Astoria in Panama City.

Fixed voice revenue of US$58 million was 5% lower than the same period last year driven by a reduction in national usage. Subscriber numbers continued to decrease as customers substituted to other products, but the rate of decline slowed due to the impact of triple play offerings. Lower national revenue masked a better trend from international as transit traffic increased.

Enterprise, data and other revenue at US$38 million was higher than last year by 6% driven by the growth of corporate segment sales in data centres and leased lines as the Panama economy improves.

Gross margin at US$198 million was 3% better than last year driven by the strong mobile performance. As a percentage of revenue, gross margin was the same as last year.

Operating costs increased by 3% to US$80 million due to higher network and property costs following expansion of the mobile network.

Higher gross margin from mobile more than offset the decline in fixed voice and higher operating costs resulting in EBITDA of US$118 million, 3% better than last year. The EBITDA margin was maintained at 40% in the first half.

A change in tax legislation from 1 January 2014 means that Cable & Wireless Panama's corporate tax rate will be reduced from 30% to 25% putting it in line with its competitors.

Panama has secured a new 20 year mobile licence agreement and an additional 30MHz of spectrum for a one-off cost of US$100 million. Further details are provided on page 9.

Our proportionate ownership of Panama EBITDA for the six months ended 30 September 2013 was 49%.

Caribbean

· Mobile revenue up 2%, 19% growth in data at constant currency

· Jamaica mobile subscriber growth of 23%

· LTE investments underway in The Bahamas and Cayman

· Cost reduction on track - outsourcing underway, headcount down 18% across the region

Revenue at US$120 million was 3% lower than the prior year primarily due to a fall in enterprise revenue driven by the sale of our African enterprise business, Afinis, and reduced volumes of transit traffic. Mobile revenue in the period at US$33 million was 3% higher than the prior year. In addition, on 1 October we successfully launched LTE services. Broadband & TV revenue remained in line with the prior year.

Gross margin at US$73 million was 6% higher than the prior year driven by lower mobile outpayments and a change in mix with reduced low margin transit traffic revenue. As a percentage of revenue, gross margin improved by 5 percentage points as we exited low margin businesses.

Operating costs of US$31 million were 3% lower primarily due to the disposal of Afinis in August 2012.

EBITDA at US$42 million was 14% higher than the prior year reflecting favourable currency movements (8% up at constant currency), the improvements in gross margin and lower operating costs.

Our proportionate ownership of Monaco EBITDA for the six months ended 30 September 2013 was 41%, which will revert to 55% when the CMC put option (see note 7i in the appendices) is unwound.

Our share of loss after tax from joint ventures and associates was US$1 million, US$13 million lower than the prior period.

TSTT revenue was up 3% in the period as mobile data usage increased, however profit declined largely due to a one-off operating cost following an adverse judgment in relation to a former staff pay dispute. Roshan reported results lower than the prior year as the business continued to be affected by growing competition in the country following the introduction of 3G.

Capital expenditure was US$92 million, 1% lower than last year and representing 10% of revenue.

Our principal mobile investments continue to be in 4G/HSPA+ mobile data networks supporting smartphone sales in Panama, The Bahamas and Antigua as well as LTE upgrades to our networks in The Bahamas and Cayman. We have made selective fibre network investments in Barbados and Cayman to offer high-speed broadband services. We also continued to invest in advancing our billing and customer relationship management systems.

We anticipate continuing our mobile investment across the Caribbean and making strategic investments in transmission capacity and cable systems to support both retail and carrier sales.

On 30 October, we announced that our Panama business secured a new 20 year mobile licence agreement to run from 24 October 2017 to 24 October 2037. Under the agreement our Panama business will have access to 65MHz of spectrum (including 30MHz of new spectrum) for a one-off cost of US$100 million (c.US40 cents per MHz per head of population). The details of holdings under the new licence agreement are as follows:

· Retained access to 25 MHz of the 850 MHz band

· Retained access to 10 MHz of the 1900 MHz band

· Additional 10 MHz of the 1900 MHz band

· New 20 MHz of the country's currently unused 700 MHz band, which will be opened up in 2014 and designated for use by mobile services

Our Panama business will be granted access to the additional block of 1900 MHz spectrum immediately and it will also gain access to the 700 MHz spectrum, a lower level frequency ideal for the transmission of mobile data over long distances, from August 2014. This will enable Panama to continue the rapid growth of mobile data services. Payment will be made in the second half of 2013/14.

Depreciation and amortisation at US$129 million was in line with the prior year.

Other Group items

Net other operating expense

The US$8 million net other operating expense incurred in the first half of the year was largely due to non-cash foreign exchange movements on the Group's UK pension schemes. The prior period charge of US$3 million was due to a loss on sale of property, plant and equipment and foreign exchange movements on the Group's UK pension schemes.

Exceptional items in the period of US$55 million comprised charges for the Group cost reduction initiative and were primarily in relation to redundancy payments. Our expectation remains that this programme will result in between US$150 million and US$200 million of cash costs of which approximately US$100 million will be incurred in this financial year. The prior period charge was associated with redundancy and restructuring programmes in the Caribbean.

Net finance expense

Net finance expense for the Group of US$70 million was in line with the prior year and consisted of finance income of US$4 million (US$16million in H1 2012/13) and finance expense of US$74 million (US$87 million in H1 2012/13). Reduced finance expense following the redemption of sterling bonds due in August 2012 and repayment of other borrowings were offset by foreign exchange gains in the prior period.

Other non-operating income

In the prior period, the charge of US$15 million reflected the loss on disposal of Afinis.

Income tax expense

The income tax charge of US$27 million (US$29 million for H1 2012/13) was in respect of overseas taxes. This charge represented an effective tax rate of 30% pre-exceptional items. Removing the impact of non-deductible interest charged on the Group's central borrowing facilities this charge represented an effective tax rate of 18% pre-exceptional items.

Discontinued operations

As at 30 September 2013 the Seychelles business was the only business recognised as held for sale in the Group.

Gains on disposals

During the period we recognised an accounting gain of US$1,011 million following the completed disposals of our Macau and Islands businesses comprising operations in the Maldives, the Channel Islands and Isle of Man, the South Atlantic and Diego Garcia.

Group cash flow  

The Group generated operating cash flow before exceptional items of US$206 million in the six months ended 30 September 2013, 6% higher than the same period last year as EBITDA generation improved and capital expenditure was in line with the prior year. The outflow from movements in working capital and provisions was lower than the prior period and largely reflects the cyclical nature of our payments profile.

Investment income of US$4 million included dividends received from joint ventures and associates of US$1 million and US$3 million of interest received on cash balances.

Fixed charges

Income tax paid in the first half of US$28 million was lower than the prior year primarily due to a change in phasing of payments through the year in Panama. Interest of US$48 million was paid on our external borrowings which was in line with the prior period. We paid dividends to non-controlling interests of US$36 million in the first half which was US$9 million lower than last year.

Dividends to our shareholders were lower than the prior year as the final dividend paid in the half was based on US4 cents per share for the financial year 2012/13 compared to US8 cents per share for the financial year 2011/12.

Non-recurring items and exceptionals

The net cash outflow included US$62 million for exceptional items that related to restructuring costs primarily in the Caribbean, where our cost initiative has progressed in line with our expectations. We also received proceeds of US$1.4 billion for the disposals of our Macau and Islands businesses.

Group cash and debt

During the period net debt reduced by US$1,291 million to US$360 million primarily due to receipt of disposal proceeds.

Pensions

As at 30 September 2013, the defined benefit section of the Cable & Wireless Superannuation Fund (CWSF) had an IAS 19 deficit of £88 million, compared to a deficit of £86 million as at 31 March 2013.

As part of the March 2010 triennial review cash contributions to CWSF were agreed with the pension trustees from 2014 to 2016 in order to eliminate the actuarial deficit however these payments are subject to the outcome of the actuarial valuation as at March 2013. The Group is in on-going discussions with the trustees in this regard. This future deficit funding constitutes a minimum funding agreement and, in accordance with accounting standards, we are required to account for this within our IAS 19 deficit. The IAS 19 deficit recorded at 30 September 2013 represents the present value of the maximum amount committed under the minimum funding agreement.

The fund assets at 30 September 2013 were approximately invested 72% in the bulk annuity policy, 18% in equities, and 10% in bonds, property, swaps and cash.

There are other unfunded pension liabilities in the UK of £29 million (£30 million at 31 March 2013). The Group holds investments in gilts of £22m to partially back the UK unfunded pension liabilities. Other schemes in Cable & Wireless Communications have a net IAS 19 surplus of US$20 million (US$19 million surplus at 31 March 2013).

We have adopted the revised version of the IAS 19 pension accounting standard in the period with retrospective restatement of the prior year comparatives. The impact was a reduction in EBITDA and profit before tax of US$4 million for the six month period to 30 September 2013 (US$4 million for the six month period to 30 September 2012). There was no balance sheet impact.

Dividend

We are declaring an interim dividend of US1.33 cents per share.

The interim dividend of US1.33 cents per share will be paid on 10 January 2014 to ordinary shareholders on the register at the close of business on 15 November 2013. Subject to financial and trading performance in the second half of 2013/14, we expect to recommend a final dividend of US2.67 cents per share, resulting in a full year dividend of US4 cents per share.

A currency option and the dividend reinvestment plan will be offered in respect of the interim dividend. The default currency for payment is sterling. Shareholders wishing to receive their dividend in US dollars or wishing to participate in the dividend reinvestment plan should make an election using CREST Input Message or return a completed Currency Mandate Form or Dividend Reinvestment Plan Mandate Form to: Equiniti Ltd, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA by 10 December 2013. Copies of the mandate forms are available from Equiniti Ltd. UK callers: 0871 384 2104; overseas callers: +44 (0)121 415 7052 or from our website www.cwc.com.

The sterling dividend payment amount per share will be announced on 16 December 2013, and will be based on the prevailing GBP sterling to US dollar exchange rate at 2:00pm GMT on that date.

Transactional activity

On 3 April 2013, CWC completed the sale of the majority of the Islands sub-group to Batelco as part of a transaction described in note 7i of the appendices and received total cash proceeds of US$601 million in respect of these disposals. This represented consideration of US$470 million for the Islands sub-group plus US$31 million of net cash in the disposed businesses attributable to CWC, together with US$100 million in respect of the 25% shareholding in Compagnie Monegasque de Communication SAM (CMC Minority Shares), the holding company of the Group's interest in Monaco Telecom.

On 20 June 2013, CWC completed the disposal of its 51% stake in Companhia de Telecomunicações de Macau S.A.R.L. (CTM) to CITIC Telecom International Holdings Limited. At completion, CWC received total cash proceeds of US$806.8 million comprising consideration of US$749.7 million (on a cash and debt free basis) plus US$57.1 million representing the estimated proportionate share of net cash in CTM attributable to CWC and initial working capital adjustments.

Update on other disposals

We expect the Seychelles disposal to complete this year. We have agreed to unwind the transaction we announced with Batelco for a minority stake in our Monaco business at the same time and as a result the CMC Minority Shares purchased by Batelco will be transferred back to CWC for US$100 million. Monaco remains a strong and growing operation within our Group and we are reviewing our options for the business.

On 14 October 2013, CWC announced that Monaco Telecom had agreed to sell its Algerian satellite communication business Divona SpA to Smart Link Com SpA, of Algeria, for a total consideration of US$1.4 million on a cash free and debt free basis.

Strategic alliance with Columbus Networks Ltd

On 13 May 2013, CWC announced it had entered into a strategic alliance with Columbus Networks Ltd to develop its international wholesale capacity business.

Appendices

Condensed consolidated interim income statement 15

Condensed consolidated interim statement of comprehensive income 16

Condensed consolidated interim statement of financial position 17

Condensed consolidated interim statement of changes in equity 18

Condensed consolidated interim statement of cash flows 19

Reconciliation of net profit to net cash flow from operating activities 20

Notes to the condensed consolidated interim financial statements 21

Risks to our future success 29

Independent review report by KPMG LLP to Cable & Wireless Communications Plc 30

Responsibility statement 31

Important disclaimer 31

Operating performance information

H1 2013/14 CWC constant currency results detail 32

KPI detail 33

Exchange rates 34

EBITDA by currency 34

Condensed consolidated interim income statement

\* The results of the Islands sub-group and Macau have been presented in discontinued operations (note 7)

1 Includes discontinued operations

The notes on pages 21 to 28 are an integral part of these financial statements

Condensed consolidated interim statement of comprehensive income

The notes on pages 21 to 28 are an integral part of these financial statements

Condensed consolidated interim statement of financial position

The notes on pages 21 to 28 are an integral part of these financial statements

Condensed consolidated interim statement of changes in equity

The notes on pages 21 to 28 are an integral part of these financial statements

Condensed consolidated interim statement of cash flows

\* The results of Islands sub-group and Macau have been presented in discontinued operations (note 7)

The notes on pages 21 to 28 are an integral part of these financial statements

Reconciliation of net profit to net cash flow from operating activities