Half Yearly Report

ANNOUNCEMENT

5 November 2015

CABLE & WIRELESS COMMUNICATIONS PLC

RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015

Full year outlook in line with guidance; strong first six months trading

3 year plan on track; integration benefits increasing

Highlights

§ Group revenue of US$1.2 billion up 4%; 5% higher at constant currency against the prior year

§ Group EBITDA of US$427 million up 4%; proportionate EBITDA increased by 5% against the prior year

- Excellent performance in the Caribbean, our largest region, with EBITDA up 22%; cost restructuring launched in Panama and the Bahamas

§ Momentum building with second quarter EBITDA 11% higher than prior year; up 13% on proportionate basis

§ Strong progress with integration plans

- US$25 million total net run-rate cost savings achieved; anticipated exit run-rate of US$70 million for 2015/16

- Unified FLOW brand launched in Barbados, Jamaica, Trinidad and Tobago, Cayman, and St. Kitts and Nevis; early cross selling success

§ Operating cost synergies upgraded by 47% to US$125 million; no change to US$110 million costs to achieve

§ Second year of Project Marlin; US$265 million capital investments focussed on fixed network integration, fibre rollout and reinforcing mobile networks

- 6% customer growth: mobile data subscribers up 38%, broadband subscribers up 7%

§ Operating cash flow up 30% to US$162 million following EBITDA growth and lower capital expenditure

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

"Our Company has significant growth and synergy potential. Whilst we are in the first phase of our 3 year plan, we are pleased with initial progress and expect to deliver a strong second half and full year performance in line with outlook. We are also pleased to have identified additional synergies, lifting our previous US$85 million expectation to US$125 million whilst maintaining the same anticipated costs to achieve those savings. We remain on track with our 3 year plan and are confident our business model will deliver significant long-term shareholder value creation.

"Project Marlin is now in its second year and, having established HSPA+ as the minimum network standard across CWC's mobile footprint, our focus is now on LTE upgrades in select markets. We are also rolling out high-speed data networks in our markets and passed an additional 33,400 homes with 832 kilometres of fibre during the half whilst upgrading 53,000 customers in Barbados from legacy networks. We are also excited to have secured exclusive Premier League football rights from 2016/17 to 2018/19, which we will carry on our new channel, FLOW Sports Network, set to launch in the third quarter.

"The team has been doing an excellent job focussing on integration activities, combining our fixed networks, launching our new "FLOW" quad-play brand, and introducing a more efficient organisational model to drive synergies and accountabilities. Momentum generated from our investments, and synergies from the integration, led to 11% growth in EBITDA in the second quarter versus last year, further underpinning confidence in our 3 year plan. We expect this momentum to continue in the second half."

Outlook

Overall economic growth prospects in our markets remain positive with some variability between countries. Latin American countries such as Panama and Colombia have relatively robust forecast GDP growth rates of 6% and 3% respectively, whilst in our Caribbean markets there are lower growth rates as the region continues to show a more modest pace of recovery following the previous economic downturn. Certain markets in Latin America have experienced currency devaluation in the past year, however 87% of CWC's EBITDA is US dollar pegged, managed or linked.

Although we face increasingly competitive conditions within some markets, for example with the introduction of mobile competition in the Bahamas later this fiscal year, and continued subsidised mobile offers in Panama, we expect to continue making good progress in growing our video, broadband and B2B revenue and reducing our operating cost base following our acquisition of Columbus.

With increasing traffic over our networks, improved service reliability, a focus on improving NPS following the negative impact of migration activities, and a more diversified set of products and services to offer our customers, the decisions we have made to invest in our infrastructure and our people position us well to capitalise on the positive growth trends across our underpenetrated markets. We invested heavily in growing our B2B sales organisation across Latin America in the first half, and therefore we anticipate that our monthly recurring revenue at the end of the year will be significantly higher than at the start.

Commenting on the Group outlook, Phil Bentley, Chief Executive of Cable & Wireless Communications Plc, said:

"Run-rate integration cost synergies ended the first half at US$25 million and we expect these to total US$70 million by the year end. However, this is only the initial phase of realising the cost synergy benefits identified over the next three years which have now been raised to US$125 million. In addition there are significant opportunities to deliver revenue synergies from cross-selling and up-selling which, when combined with network and back office improvements under Project Marlin, create the ideal conditions for material revenue growth to be added to the upgraded cost savings flowing from the Columbus acquisition."

As previously stated, our strategy is expected to deliver, in the three years to 31 March 2018:

§ Annual mid to high single digit revenue growth and significant EBITDA growth

- Our focus in the first half of the year to 31 March 2016 has been on the integration of Columbus which has generated positive early results and is creating momentum for an improved second half operating and financial performance;

§ Run-rate operating cost synergies of US$125 million and total capex synergies of US$145 million

- We plan to deliver US$70 million of operating cost synergies, a higher level than previously guided, on a run-rate basis and 35% of our capex synergies by 31 March 2016;

§ EPS accretion - material accretion from 2016/17; dilutive in 2015/16; and

§ Following completion of Project Marlin, capital intensity is expected to fall to c.14% of revenue in the year ending 31 March 2018

- Capital expenditure was 8% lower in the first half against the prior year and we remain on target to meet our outlook.

Long Term Incentive Plan (LTIP)

At its meeting in June, the Remuneration Committee approved the vesting conditions for the 2015 LTIP, the first to be established to include the operations and benefits from the Columbus acquisition. These vesting conditions included EBITDA, revenue, net promoter score and economic profit, and have been agreed with the Executive Directors and the Senior Vice Presidents, all of whom are on the same plan. The maximum vesting conditions for 2017/18 apply at revenue of US$2,926 million including synergies, and EBITDA of US$1,252 million including synergies.

Group results overview

Annual results presentation

Cable & Wireless Communications will hold its 2015/16 interim results presentation for analysts and institutional investors at 9:30am GMT on Thursday 5 November 2015. 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

2015/16 First Half Performance Review

Group revenue in the first half of 2015/16 grew by US$47 million or 4% against pro forma results for the prior year (US$35 million or 3% excluding Sonitel in both periods and adjusting for currency movements).

Mobile network improvements through Project Marlin investments in HSPA+ and LTE infrastructure have facilitated mobile data revenue growth of US$26 million or 17%. Traffic over our mobile networks grew by 93% in the year and across the Group, 46% of customers now have a smartphone. Focussing on value added services, we have broadened our mobile data offering beyond basic voice and added 510,000 new data plans over 12 months (1.9 million in total).

In our biggest region, the Caribbean, our Jamaica business continued to attract new mobile subscribers (up 161,000 or 22%) and gain market share, leading to 10% revenue growth (14% at constant currency) and 45% growth in EBITDA. Across the Caribbean, Project Marlin investments in 2014/15 helped drive a US$15 million or 10% increase in mobile revenue with HSPA+ speeds now provided across the region, and a US$9 million or 9% rise in broadband revenue as we grew our subscriber base. Total Caribbean reported revenue grew 6% year over year, with EBITDA rising 22%. As integration momentum builds, an even stronger second half is expected.

Our Panama business had a challenging first half as intense competition led to a 1% decline in mobile revenue driven by reduced ARPU, though we maintained our mobile market share of 50%. Video revenue grew by US$2 million or 22% as we increased penetration with subscribers up 45%, however this did not offset mobile and fixed voice decline. EBITDA was down 3% on a reported basis and would have been 5% lower excluding Sonitel.

In the Bahamas, revenue declined 5% as we continued to prepare BTC for the advent of a second mobile competitor by updating roaming agreements with international carriers whilst also being impacted by the introduction of VAT at the start of the calendar year. We anticipate that a new mobile operator will enter the Bahamian market before the end of our fiscal year, which will adversely impact performance in the outlook period. Our new IPTV product is due to be launched in the second half, providing our customers with access to the leading quad-play offering, and is expected to partly offset the impact of a new mobile competitor.

Networks and LatAm revenue at US$130 million was up 8%, or US$10 million. This was net of a US$5 million negative currency impact as the Colombian Peso devalued by 38% against the prior year. Despite this headwind, LatAm revenue was up 18%, US$6 million, as we saw increased demand for Managed Services with 26% of total revenue related to value added services, up two percentage points against the prior year. C&W Networks grew by US$4 million as our extensive connectivity solutions serviced growing data traffic needs across the region.

We are focussed on improving our cost discipline in all areas of the business and have today announced an increase in expected cost synergies following the acquisition of Columbus from US$85 million to US$125 million. In the first half, we made significant progress reducing headcount by 560, closing several administrative and retail locations, and saving on video content rates and mobile costs. Together, these represented a total run-rate benefit of US$25 million. The reorganisation of our workforce included the exit of 110 employees in Panama as we proceed to bring the business into our Group's new operating model. Our expectation of achieving US$70 million of cost savings on a run-rate basis by the year end is underpinned by a further 340 planned exits in the second half.

In the first half, we generated EBITDA of US$427 million, up 4% on the prior year. Momentum has been building since our acquisition of Columbus and we saw improved revenue and EBITDA growth in the second quarter (up 2% and 13% respectively against the first quarter) as we benefitted from integration, driving revenue through increased demand for our products and synergies from reduced staff costs. With momentum increasing in the business, we reconfirm our current outlook for the full year and medium term.

Although we now view the Columbus operations as fully integrated into the CWC Group reporting structure (with the exception of certain US assets that were carved out into a separate grouping - the US carve-out entities - see page 35), legacy Columbus revenue for the period was US$307 million and EBITDA was US$136 million, up 8% and 6% respectively. Inclusion of the carve-out entities in the first half performance of Columbus would have resulted in revenue and EBITDA of US$328 million and US$139 million.

Vision and Strategy

We seek to deliver long-term and sustainable growth for shareholders through growing the lifetime value of our customer relationships. The Company's strategy has six imperatives.

Strategic imperatives

· Drive to mobile leadership ‑ Deliver the best network, data packages, handset range and customer service;

· Fixed-mobile convergence ‑ Leverage our unique combination of fixed and mobile assets;

· Video and content leadership ‑ Generate video and broadband growth whilst reducing fixed line churn;

· Grow our B2B and B2G business ‑ Build bespoke, customer-centric solutions leveraging our sub-sea and terrestrial assets;

· Build a leading wholesale network ‑ Deliver unrivalled intra-regional connectivity; and

· Deliver successful integration ‑ Reduce costs, improve cross selling revenues and create a winning culture.

Performance against focus areas for H1 2015/16

At the beginning of the year, we laid out 5 key areas of focus

1. Continue to invest in network superiority

Consistent with our vision and strategy, the first half of 2015/16 saw increased capital expenditure relative to our medium term target as we entered the second year of Project Marlin. The main areas of investment focused on:

Mobile networks

In the first year of Project Marlin we successfully upgraded to HSPA+ networks with maximum speeds of 21Mbps across all our markets and launched LTE services in the Bahamas, Cayman, Panama, and Antigua, providing more than 4x the throughput of HSPA+. In the first half of the current fiscal year, our total number of network sites grew by 10% and our mobile networks carried 93% more data traffic, with Jamaica data traffic up 241%, BTC up 137%, Panama up 81% and Barbados 73% higher. Although we have more work to do in terms of mobile network upgrades, as we reach the midway point of Project Marlin, we have networks that are better than, or comparable with, our competitors across all our markets.

During the period, we added 223 second carrier sites across the Caribbean and 69 second and third carriers in Panama, enabling us to deliver better quality and speeds for our customers in high traffic areas and driving increased data usage. In addition, 24 LTE sites were added in Anguilla and Turks & Caicos, where mobile data revenue was up 127% versus the prior period, and 54 LTE sites were deployed in Panama where mobile data revenue grew by 10%.

Fixed networks

In the first half, we deployed 832 kilometres of fibre, passing an additional 33,400 homes. As part of our Columbus integration plan we also improved broadband speeds for our customers in Barbados by migrating them from legacy copper networks onto fibre based networks.

In the Caribbean, we completed Phase 1 of our broadband expansion in Jamaica passing 800 homes in Portland with Phase 2 underway and set to pass an additional 7,300 homes taking our total homes passed to 276,000. We also began installation of a new backbone to upgrade core capacity to multiple 100Gbps links. In Trinidad, we passed an additional 4,800 homes with HFC, taking our total homes passed to 311,000 in Trinidad and we passed an additional 19,000 homes with FTTH in Barbados taking our coverage to over 100,000 homes passed. In the Bahamas, we have completed the design phase of our plans to pass 14,200 homes with FTTH by the year end as we roll out our video product. In Panama, whilst we are focussed on increasing the penetration of our existing fibre footprint, we passed an additional 2,000 homes with HFC during the period.

Traffic on our fixed networks grew 33% as we drove our fixed-mobile convergence strategy to most efficiently deliver data to customers. We saw our 'production cost' of data fall 29% against the prior year measured by cost per GB (gigabyte) as we improved our delivery efficiency.

2. Target #1 for Customer Service and cross selling

We have now successfully launched our new "FLOW" brand across Barbados, Jamaica, Trinidad and Tobago, Cayman, and St Kitts and Nevis, enabling us to deliver a comprehensive, full-service offering to all our existing and prospective customers in those markets. One of the benefits we envisaged following the acquisition of Columbus was to provide additional fixed line services to our mobile customers and mobile services to Columbus' legacy fixed line customers. Barbados was the first to launch our new combined brand and product suite in July, and we are in the early stage of executing this strategy. However there have been strong initial results. Of the customers we contacted in Barbados, a market without mobile number portability and therefore one where it is harder to attract postpaid customers, we have achieved a 19% conversion rate, and generated additional annualised revenue of c.US$1 million. We have begun a similar initiative in Jamaica more recently with a higher conversion rate expected as mobile number portability is effective there. We will continue to focus on ensuring our customers are aware of the leading products we offer.

As part of our focus on customer service we will insource our field operations and move our call centre back to Jamaica as poor customer service has been negatively impacting our Net Promoter Scores.

3. Mid to high single digit revenue growth

Reported revenue growth in the first half of 4%, up 5% on a constant currency basis, represented a good start for the Group following the acquisition of Columbus, with momentum building in the second quarter, up 2% on the first quarter and keeping us on track to meet our full year outlook. We anticipate future growth will be driven by increased mobile data penetration - smartphones represented 69% of handset sales in the first half, up from 59% in the prior year, and only 46% of our customers have data plans; higher broadband and video penetration helped by faster networks and differentiated video content - for example FLOW Sports Network with exclusive Premier League football coverage; and business solutions growth in Caribbean and Latin American markets.

4. Significant EBITDA growth through top line and synergy delivery

EBITDA increased by 4% on a reported basis in the first half, up 5% on a constant currency basis, with 17% growth from the first quarter to the second quarter as synergy benefits drove significant reductions in operating costs. We remain focussed on achieving the targeted synergies from the Columbus acquisition and reducing operating costs overall, thereby driving significant growth in EBITDA.

5. Quad-play in consumer markets; expand B2B in LatAm supported by submarine and terrestrial/metro networks

With our new FLOW brand, we anticipate increasing the number of customers choosing triple or quad-play services from the Group by offering bundles combining each of our services. We anticipate that our leading technology offering and differentiated content will enable us to increase our penetration of triple and quad-play bundles thereby also reducing churn.

Commissioning of the PCCS network, a 6,000 kilometre submarine cable connecting Ecuador, Panama, Colombia, Aruba, Curacao, Tortola (in the British Virgin Islands), and Puerto Rico then terminating in Florida, USA, has been completed. This has allowed us to provide carrier customers with more traffic routing alternatives as one of the cable's founder consortium members. In Colombia, we continue to invest in metro and long-haul networks (1,385 additional kilometres in total) building on our existing strong fibre footprint and Tier III datacentre capabilities. In the first half, our DRaaS product was positioned in the Gartner Magic Quadrant, we were recognised as Avaya Central America and the Caribbean mid-market partner of the year, we achieved the CISCO Master Service Provider designation, won the Frost & Sullivan 2015 Central American & Caribbean Data Communications Services Industry Company of the Year award, and were winner of the Best Caribbean Wholesale Carrier award at the Global Carrier Awards 2015, for the third consecutive year.

Integration and Synergies

Since completion of the Columbus acquisition, the Group has made good progress integrating the business into CWC.

Our initial focus is to deliver superior customer service through investment in areas such as customer support, field operations and network operations activities, and improving our quad-play product offering.

We have also established the executive management structure for the combined Group, ensuring retention of highly skilled colleagues from both Columbus and CWC, whilst also providing a framework which will enable decisions to be made more quickly and effectively.

The integration of back office functions such as our billing and provisioning systems will also be a focus, through the coming quarters.

Further to conditions related to the regulatory approvals of the Columbus acquisition, we continue to move forward the processes to dispose our 49% stake in TSTT and certain fibre assets in Barbados. There are no developments to report at this time.

Synergies

As a result of an extensive bottom-up exercise undertaken following the acquisition of Columbus, which was completed on 31 March 2015, the Group now expects to deliver recurring annualised pre-tax cost savings of approximately US$125 million on a run-rate basis, 47% higher than the previous target, and one-time capital expenditure synergies of approximately US$145 million in total, unchanged from previous announcements, by 31 March 2018. In addition, material revenue benefits are anticipated through an improved product offering, particularly in high-speed broadband and video services, cross-selling and reduced churn.

The additional cost savings will come primarily from further headcount reductions, implementation of the new operating model in Panama and the Bahamas and additional benefits from the insourcing of field operations.

The Group expects to incur no incremental non-recurring costs to achieve these additional synergies and, with the exception of the non-recurring costs to achieve, no material dis-synergies are expected to arise from the integration of Columbus.

Recurring cost savings

Substantial cost savings have been identified across the following areas:

· Headcount reductions (approximately US$45 million): rationalisation of overlapping headcount in back office, sales and marketing and customer service roles;

· Network & systems consolidation (approximately US$29 million): transition to Columbus' fixed line network and combining infrastructure where network footprint overlaps, renegotiation of maintenance fees, consolidation of network and service operating centres, harmonisation of IT systems;

· Implementation of new operating model (approximately US$24 million): centralisation of core back office functions and increased focus of in-market resources on commercial activities, focussed on Panama and the Bahamas;

· Insourcing of field operations and customer service (approximately US$18 million): cancelling legacy CWC contracts with external providers for network maintenance and insourcing activities; and

· Property, procurement and other (approximately US$9 million): renegotiation of vendor rates, reduction of real estate costs, leverage of Columbus' video content buying terms and access to greater economies of scale.

We expect to have implemented, in value terms, 55% of these cost savings by the end of 2015/16, 75% by the end of 2016/17 and 100% by the end of 2017/18.

To achieve these benefits we anticipate one-off cash costs of US$110 million, split approximately 65%, 15% and 20% over the three years following the acquisition. US$68 million of the operating exceptional items charged in the year ended 31 March 2015 relate to these cash costs.

During the first half we exited approximately 560 employees generating run-rate savings of US$23 million, and run-rate savings of US$2 million through the closure of several administrative and retail locations and savings on video content rates and mobile costs. There were US$34 million of exceptional cash costs related to these savings in the period.

One-off capex synergies

In addition, the Group will benefit from one-time synergies of approximately US$145 million related to avoidance of duplicative one-off capital expenditure through network consolidation in the overlapping markets where there had been investment plans under Project Marlin and Columbus already has existing network infrastructure. Such synergies are expected to be split 35%, 40% and 25% over the three years to 31 March 2018.

Revenue synergies

Material revenue synergies are anticipated from selling additional services to existing customers through cross-selling of triple-play and quad-play bundles, improving legacy CWC's video offering in non-overlapping markets, improved network quality reducing customer churn and an enhanced B2B and B2G offering.

REVIEW OF CWC OPERATIONS

Income statement - continuing operations pro forma Columbus1

Caribbean

· EBITDA up 22% to US$213 million; 5 percentage point increase in margin to 39%

· Revenue 6% higher

· Mobile revenue up 10%; subscriber growth of 15%

· 119,000 smartphones sold representing 55% of total, up 50% versus the prior year

· Jamaica mobile revenue up 16%, 20% at constant currency

· Operating costs 5% lower; 169 employees exited the business

Legacy CWC

Legacy Columbus

The Caribbean business unit encompasses our combined operations in Anguilla, Antigua, Barbados, British Virgin Islands, Cayman, Curacao, Dominica, Grenada, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent, Trinidad and Tobago and Turks and Caicos. The Caribbean reported revenue of US$547 million was 6% up on the prior year. At constant currency, revenue would have been US$35 million higher, up 7% on the prior year.

Mobile revenue was up US$15 million against the prior year at US$158 million with increasing demand for mobile data; data revenue increased US$13 million or 44% year over year. Mobile data traffic increased by 241% in Jamaica, 73% in Barbados, 5% in Cayman and 102% across the other markets. Data penetration of our subscriber base is now 35%, up 11 percentage points on the prior year. We expect the shift in mix from voice to data to continue as we benefit from investments in high-speed networks.

Mobile subscriber growth of 186,000 was primarily driven by an increase in prepaid subscribers in Jamaica, where our market share of 31% has grown by 5 percentage points in the last 12 months.

Broadband revenue was 9% higher than the prior year driven by subscriber growth in Trinidad, Barbados and Jamaica. We are focussing on delivering high-speed fibre access in markets where we can see a clear return. In Barbados, our combined network with Columbus passes over 100,000 homes with 78,000 connected with broadband. 

Video revenue was up US$1 million (1%) against the prior year. Alignment of subscriber recognition policies have led to the disconnection of 33,000 customers in the period, representing a c.US$1 million reduction in monthly revenue. This masks underlying organic video growth in the Legacy Columbus business where the subscriber base grew by 22,000 (6%). We see the development and launch of our own sports channel, FLOW Sports Network, and the acquisition of valuable content such as exclusive rights to Premier League football, NFL Sunday Ticket and the 2016 Olympics, as a major differentiator of our service in the region.

Fixed voice revenue at US$98 million was in line with the prior year supported by the recognition of US$4 million of one-off transit revenue. Price increases in some markets have helped offset the decline in usage, particularly international calls. Subscriber growth from the bundling of products is helping to keep fixed voice relevant, however discounted pricing is contributing to a lower ARPU from these customers.

Managed services revenue rose 7% to US$90 million as we continued to re-focus this category towards recurring, value added, revenue products such as managed security (rather than the one-off provision of firewalls), virtual servers in a CWC data centre (rather than selling one off server hardware) and providing DRaaS solutions (rather than backup systems hardware).

Gross margin at US$421 million was up 7% compared to the prior year reflecting reduced cost of sales as mobile data revenue increased. As a percentage of revenue, gross margin increased by one percentage point to 77%.

Operating costs reduced by US$10 million (5%) to US$208 million as we improved efficiency within the businesses and drove synergies from the integration of Columbus' Caribbean operations.

EBITDA increased by 22% to US$213 million, driven by growing revenue and lower operating costs. The EBITDA margin at 39% was 5 percentage points higher than the prior year. The legacy C&W Caribbean business accounted for US$353 million of revenue and US$128 million of EBITDA in the combined Caribbean segment.

Capital expenditure at US$133 million, represented a 6% decline against the prior year with 92% of balance sheet investment focussed on our mobile and fixed segments to enhance our HSPA+ and LTE networks capacity as well as enhancing our fibre networks.

Our proportionate ownership of Caribbean EBITDA for the period ended 30 September 2015 was 93%.

Panama

· Total revenue up 7% driven by 63% growth in managed services; like-for-like down 1%

· Data plans up 32% with 10% growth in mobile data revenue; LTE launched in March 2015

· 22% growth in video revenue following network improvements

· EBITDA down 3%; like-for-like down 5%

Revenue at US$322 million was 7% higher than the prior year as video and managed services growth (primarily due to the acquisition of Sonitel) offset the continued decline in fixed voice as we continue to see fixed to mobile substitution.

Mobile revenue at US$175 million was down 1% against the prior year. Subscribers increased by 92,000, driven by a 3% increase in prepaid customers and a 10% increase in postpaid customers as we launched more affordable smart devices. Data revenue was up 10% on the prior year, however this did not offset voice revenue decline of 9% as competition and OTT voice substitution caused ARPU to fall. Data penetration of our customer base increased by 11% percentage points to 51% following a 32% increase in data subscribers as a wider range of data plans and launch of our LTE service in March 2015 stimulated both prepaid and postpaid usage. We maintained our market share at 50%.

Broadband revenue of US$25 million was in line with the prior year. An increase in subscribers of 3% to 136,000, was offset by a fall in ARPU. We are upgrading our fixed networks with HFC infrastructure to drive growth in this category.

Video revenue of US$11 million was up 22% and subscribers increased by 21,000 following growth in both HFC and DTH subscribers subsequent to the improvement in service last year. As we upgrade our network and improve our TV experience, we expect to see further growth.

Fixed voice revenue of US$49 million was down 9% against the prior year due to lower domestic call revenue. Subscriber numbers continued to decline as customers substituted to other products. This trend is expected to continue.

Managed services revenue of US$62 million grew by 63% primarily as a result of the acquisition of Grupo Sonitel which was completed in September 2014. Absent the acquisition, delays in the award of government contracts in Q1 impacted revenue for the half. During the second quarter, some of these delayed contracts were awarded, driving revenue 34% higher than the first quarter. Consistent with the strategy in the Caribbean, we are shifting the B2B business away from one-off solution installations, towards services that generate a recurring revenue stream.

Gross margin at US$204 million was up 1% on the prior year. As a percentage of revenue, gross margin was 63%, declining 4 percentage points due to the increase in lower gross margin managed services revenue.

Operating costs were 6% higher than the prior year due to the inclusion of Sonitel's cost base. This resulted in EBITDA of US$116 million, which was 3% lower than last year. The EBITDA margin for the period was 36%, again impacted by increased managed services revenue. We have reorganised our workforce in Panama, reducing headcount by 15% against the prior year as we proceed to bring the business into our Group's new operating model, and saw operating costs 4% lower in the second quarter versus the first quarter. Further cost reductions have been identified in the second half of the year.

Capital expenditure of US$53 million was 9% lower than the prior year as we reduced spending following accelerated investments in expanding our HSPA+ and LTE networks under Project Marlin in the prior year. The focus in the first half was in increasing our broadband and video capacity to deliver a better customer experience.

CWC's proportionate ownership of Panama EBITDA for the period ended 30 September 2015 was 49%.

· Total revenue down 5%, driven by mobile decline of 6% following renegotiation of roaming agreements ahead of mobile competition

· 20% growth in mobile data subscribers and 137% growth in mobile data traffic following investment in HSPA+ and LTE networks in the prior year

· Fibre-to-the-home rollout has commenced to enable launch of FLOW TV later this year

· Operating cost reduction on-track, 5% improvement in the period

· EBITDA of US$53 million, 10% lower than prior year

Revenue at US$162 million was down 5% on the prior year primarily due to a reduction in mobile revenue.

Mobile revenue was down US$8 million following renegotiation of lower roaming rates in exchange for long-term contract extensions with international carriers, which was reflected in a 9% drop in ARPU. The introduction of VAT on 1 January 2015 led to a reduction in prepaid mobile revenue, versus the prior period, as disposable income fell. Data traffic grew 137% following the additional investment in HSPA+ and LTE sites in the prior year, driving mobile data revenue up 60% excluding roaming. Data penetration of our subscriber base is now 56%, up 9 percentage points on the prior year. 

Fixed voice revenue at US$23 million declined 4% against the prior period, driven primarily by a fall in subscribers of 7,000 due to substitution of other products. This trend is expected to continue.

Broadband revenue at US$7 million was down 13%. Subscriber growth of 4,000 as we increased penetration of our high-speed DSL broadband services was more than offset by lower ARPU associated with our competitive offers. We have commenced the roll-out of fibre infrastructure in New Providence and have upgraded the existing infrastructure in Abaco and Eleuthera to offer customers faster broadband speeds and facilitate provision of FLOW TV by the end of the calendar year, a key tenet of our growth strategy.

Managed services revenue increased by US$1 million to US$14 million due to an increase in sales of data products to medium and large corporate customers. With changes in management, and more reliable networks, we see further growth in B2B emerging.

Gross margin at US$128 million was down 7% compared to the prior year reflecting the reduction in roaming revenue and higher subscriber acquisition costs as we drove increased smartphone penetration. As a percentage of revenue, gross margin declined by two percentage points to 79%.

Operating costs reduced by US$4 million, or 5%, to US$75 million as we began to realise the benefits of the on-going cost reduction initiatives. Headcount decreased by 8% to 719 in the period and further initiatives will continue to right-size the cost base ahead of competition.

EBITDA of US$53 million was 10% lower than the prior year with the EBITDA margin of 33% declining by two percentage points as the impact of lower roaming revenue was not fully offset by operating cost savings.

Capital expenditure of US$36 million was 33% higher than the previous year with 79% of balance sheet investment geared towards expanding our HSPA+ and LTE infrastructure as well as expanding our Next Generation Network (NGN), fibre and high-speed DSL network.

Our proportionate ownership of BTC EBITDA for the period ended 30 September 2015 was 49%.

Networks and LatAm

· Revenue up 8% despite Colombian currency headwind

· Several wholesale contract wins with global carriers

· Increased operating costs as a result of C&W Business LatAm team growth

Networks and LatAm comprises the C&W Networks business and the Latin American operations of C&W Business, including Colombia, Guatemala, Honduras, El Salvador, Costa Rica and Dominican Republic.

Revenue at US$130 million was up 8% against the prior period on a reported basis and 12% higher at constant currency as the Colombian Peso devalued by 38% against the prior year.

This was predominantly due to strong growth by C&W Business in LatAm, up US$6 million or 18%, driven by Data Services momentum in Colombia, Guatemala, El Salvador and Dominican Republic. We also saw growth in Security and Disaster Recovery services across all of our markets as we focus on being a leader in the provision of value added Business Solutions for Enterprise and Government. New markets of Peru and Ecuador made a good start. The C&W Networks wholesale business grew by US$4 million due to the signing of several long-term leases, tower backhaul and increased efforts to secure network-to-network connections with global carriers.

Gross margin of 81% improved by one percentage point due to lower off-net costs, balanced by increased connectivity costs following sales in countries without owned terrestrial fibre networks.

Operating costs, at US$51 million, were 31% higher due to increased staff costs as we established our C&W Business team. This resulted in EBITDA US$54 million, down 5% on the prior year.

We fully owned the C&W Networks business and C&W Business LatAm operations for the period ended 30 September 2015.

· Reported revenue in line with prior year, up 8% at constant currency

· EBITDA of US$10 million, in line with prior year, up 11% at constant currency

· Mobile subscribers up 5%, market leadership with 68% share

· Launch of IPTV in July - early success with 3,500 subscribers and 25% market share in 3 months

The Seychelles business generated revenue of US$27 million, in line with the prior year despite a 6% devaluation of the Seychelles rupee in the period. Our high-speed LTE mobile network provides a strong platform for mobile data growth given penetration in the business remains low at 36%. In the three months since the launch of our IPTV product we have achieved strong subscriber growth and positive customer feedback. We anticipate that there is further potential for growth in video, particularly through the hospitality industry where we have a leading market position for fixed services.

EBITDA of US$10 million was also in line with the prior year and up 11% at constant currency.

We fully owned the Seychelles business for the period ended 30 September 2015.

Other includes management, royalty and branding fees, the costs of the corporate centre and operational hub, net UK defined benefit pension charge or credit and intercompany eliminations.

EBITDA for the period was US$12 million lower than the prior year at US$(19) million primarily due the addition of central commercial, technology and business solutions capabilities and consulting fees related to the implementation of the Group's strategic initiatives.

Other Group items

Depreciation and amortisation at US$201 million was 17% lower following the accelerated depreciation of legacy assets recognised in the prior year, primarily, copper plant and facilities in markets where CWC and Columbus overlapped and legacy voice switches that were replaced as part of Project Marlin.

Net other operating expense

The US$5 million net other operating expense for the year primarily comprised foreign exchange translation gains related to the UK pension scheme as the US dollar strengthened against sterling and expense incurred following flooding in Dominica due to Hurricane Erika. In the prior year the loss of US$2 million principally comprised a loss on sale of property, plant and equipment in the Bahamas and Panama.

Our share of the result after tax from joint ventures and associates was a loss of US$1 million against a US$11 million profit in the prior period. As a condition to the regulatory approval for the Columbus acquisition, we are required to divest our 49% stake in TSTT and we no longer retain significant influence over its management. Accordingly, our investment in TSTT has been transferred to assets held for sale and as such we do not recognise any share of profit from our holding.

Exceptional expenses totalled US$24 million in the year. The charge includes re-branding costs, integration costs and professional fees. There were no exceptional charges in the prior period. As at 30 September 2015, US$92 million of the US$110 million exceptional costs related to Columbus acquisition synergies had been expensed within our income statement. US$34 million of these expenses were cash costs during the first half.

Net finance expense

The US$123 million net finance expense for the Group included finance income of US$3 million (US$3 million in the prior year) primarily due to interest on loans receivable. The total finance expense was higher than the prior year at US$126 million (US$75 million in H1 2014/15) due to additional debt and facilities taken on upon the acquisition of Columbus.

Exceptional finance expense

The US$23 million exceptional finance expense for the Group related to unamortised capitalised fees written off for the bridge loan facilities following their successful refinancing through the issue of the US$750 million 2022 bonds.

Put option interest unwind expense

CWC has the obligation to repurchase the shares, which were issues to the Columbus vendors, if a put is exercised at c.46p (fixed in dollars at 73.49 US cents) during certain restricted periods in accordance with the Columbus acquisition agreement. A liability of US$879 million was recognised upon completion of the acquisition for the present value of the obligation. This is unwound over time, which has resulted in a charge of US$45 million in the period.

Income tax expense

There were no discontinued operations in the period. In the six months ended 30 September 2014, discontinued operations included Monaco's contribution until its disposal was completed on 20 May 2014.

Gains on disposals

During the prior period we recognised an accounting gain of US$346 million following the completed disposal of our holding in Monaco Telecom in May 2014.

Group cash flow

The Group generated operating cash flow before exceptional items of US$162 million for the period ended 30 September 2015. There was a US$92 million working capital outflow during the period. A number of items contributed to this first half movement which we anticipate will partly reverse this outflow in the second half, such as a tax prepayment in Panama, an increase in receivables related to the carve-out entities, and increased inventory ahead of anticipated higher smartphone sales during the busy Christmas period. Net investment income of US$3 million primarily comprised interest on cash balances and loans receivable.

Fixed charges

We paid US$23 million relating to income tax in the period. Interest paid on our external borrowings at US$91 million was US$64 million higher than the prior year driven by the increase in gross debt following completion of the Columbus acquisition in March 2015. We paid dividends to non-controlling interests of US$35 million in the period, which was US$13 million lower than the prior year due to timing of dividends from Panama.

Non-recurring and exceptional items

The net cash outflow included US$77 million for exceptional items related to integration costs following the acquisition of Columbus in addition to restructuring programmes in the Caribbean, the Bahamas and Panama. We made a US$48 million cash contribution to the Cable & Wireless Superannuation Fund in the period and do not anticipate any further top-up payments until H1 2016/17 per the existing agreement with the Trustees of the fund. There was a US$47 million outflow as we settled Columbus' employee incentivisation programmes following the completion of the acquisition in March 2015. Acquisition related fees of US$67 million, expensed in the prior fiscal year, were also paid in the period.

On 1 August 2015, we successfully refinanced our US$690 million acquisition facility with US$750 million unsecured bonds, maturing on 1 August 2022 with a coupon of 6.875%. Capitalised fees associated with the refinancing totalled US$30 million for which there was a cash cost of US$27 million in the half.

Group consolidated cash and debt

As part of the Columbus acquisition, we raised financing comprised of US$390 million secured and US$300 million unsecured term loans maturing on 31 March 2017. These facilities were refinanced in August 2015 with US$750 million unsecured bonds, maturing on 1 August 2022.

Consolidated net debt as at 30 September 2015 was US$2,832 million with proportionate net debt of US$2,710 million representing 4.1x first half annualised proportionate EBITDA. Our long-run target leverage for the Group is 2.5x to 3.0x proportionate net debt to proportionate EBITDA.

Following the Columbus acquisition, the debt profile of the Group has changed significantly due to the new financing of US$750 million and assuming existing Columbus debt of US$1.25 billion. Management are focussed on ensuring that the Group maintains appropriate compliance with covenants included within relevant financing agreements, reviewing key ratios relating to leverage and gearing and monitoring operational cash flows.

Pensions

In May 2014 the Company reached agreement with the Trustees of the Cable & Wireless Superannuation Fund (CWSF) on the actuarial funding valuation as at 31 March 2013. This showed a funding deficit of £109 million. Cash contributions to the CWSF for 2014 to 2016 will remain in line with the agreement following the March 2010 triennial review. In addition to payments of £30 million made in July 2014, and £31 million in April 2015, a future payment of £33 million will be due in April 2016. Payments in 2017, 2018 and 2019 will be based on the outcome of the triennial valuation as at 31 March 2016 and will be in the range of £0 - £23 million each year as necessary to fund the scheme by April 2019.

As at 30 September 2015, the defined benefit section of the CWSF had an IAS 19 accounting deficit of £94 million (US$143 million), compared to a deficit of £106 million (US$158 million) as at 31 March 2015. This deficit funding agreed as part of the 2013 actuarial funding valuation constitutes a minimum funding agreement and in accordance with accounting standards we are required to account for this within the deficit. The IAS19 deficit recorded at 30 September 2015 therefore represents the present value of the amounts committed under the minimum funding agreement.

The fund assets at 30 September 2015 were approximately invested 67% in the bulk annuity policy, 17% in equities, and 16% in bonds, property, swaps and cash.

There are other unfunded pension liabilities in the UK of £30 million (£32 million at 31 March 2015). The Group holds investments in gilts of £24 million to partially back the UK unfunded pension liabilities. Other schemes in Cable & Wireless Communications have a net IAS 19 surplus of US$10 million (US$14 million surplus at 31 March 2015).

Dividend

In our full year results announcement released on 20 May 2015, the Board confirmed that subject to financial and trading performance in the financial year 2015/16 it expected to recommend a full year dividend of US4 cents per share. The Board retains that expectation.

We also announced on 22 October 2015 that the Company is in discussions with Liberty Global plc regarding a possible shares and cash offer for CWC. Following that announcement the Company is currently in an offer period for the purposes of the Takeover Code.

As a result, the Board has not declared an interim dividend at this time. However, the Board confirms it intends to declare an interim dividend of US1.33 cents per share in the event that the discussions with Liberty Global plc do not result in Liberty Global plc announcing a firm intention to make an offer for CWC in accordance with Rule 2.7 of the Code.

Appendices

Condensed consolidated income statement 20

Condensed consolidated statement of comprehensive income 21

Condensed consolidated statement of financial position 22

Condensed consolidated statement of changes in equity 23

Condensed consolidated statement of cash flows 24

Reconciliation of net profit to cash generated from operations 25

Notes to the unaudited condensed consolidated financial statements 26

Risks to our future success 37

Independent review report by KPMG LLP to Cable & Wireless Communications Plc 38

Responsibility statement 39

Operating performance information

H1 2015/16 CWC constant currency results detail 40

KPI detail 41

Exchange rates 42

EBITDA by currency 42

Basis of Preparation of and Assumptions for Synergy Statement 43

The Cable & Wireless Communications Group 44

Condensed consolidated income statement

Note:

1 Refer to note 6 for exceptional items.

The notes on pages 26 to 36 are an integral part of these financial statements

Condensed consolidated statement of comprehensive income

The notes on pages 26 to 36 are an integral part of these financial statements

Condensed consolidated statement of financial position