7th Oct 2005 06:00
7 October 2005 Update on H1 2005/6 Trading and Energis Transaction Process H1 2005/6 Trading UpdateAt both its 2005 AGM and at the announcement of the acquisition of Energis on16 August 2005, Cable and Wireless plc ("Cable & Wireless") reported thatmarket conditions in the UK remained challenging and that, as demand shifts toIP services, downward pricing pressure on legacy revenue was intensifying,confirming the requirement for scale and access to compete successfully in themarket. In addition, pending Office of Fair Trading ("OFT") approval of theEnergis transaction, a number of cost reduction initiatives in the UK businesshave been suspended in advance of a clearer understanding of the requirementsof the combined business.The UK revenue figure for 2005/6 first half shows total UK revenue in line withmanagement expectations, but with an overall shift in the revenue mix fromRetail to Carrier Services and with weaker margins in the Retail businesses.Since the announcement of the Energis transaction there has also been some lossof momentum in sales planning. Unaudited H2 H1 Reported ReportedUnited Kingdom - Revenue estimate change change 2004/ 2004/ H1 5 5 H1 v H2 H1 v H1 2005/6 ‚£m ‚£m ‚£m % % Retail 375 439 430 (15)% (13)% Carrier Services 390 353 380 11% 3% Total revenue 765 792 810 (3)% (6)%Bulldog revenue figure for 2005/6 first half is ‚£13 million reflecting theshortcomings of the BT automated process and consequent slower customerprovisioning in the first quarter, together with a temporary deferral of salesand marketing efforts while the Ofcom investigation concludes. Management focushas been on customer care and we have been encouraged by the improvement incustomer care metrics in the period.As we said at the time of the announcement of the Energis acquisition, ourindustry and our activities in the UK are at a time of transition from legacyproducts to IP technology using Next Generation Networks. The next step phaseof performance development is planned to take place as a result of the intendedcombination of the UK business with Energis. Early in the New Year we willupdate investors on our plans in the UK and set out short and longer-termtargets.National Telcos continue to perform well and looking at the Group as a whole(including Energis), although UK trading conditions remain difficult, we expecta satisfactory outcome for the full year.Energis Transaction ProcessFollowing several weeks of information exchange between Cable & Wireless andthe OFT, we have received an outline of the issues that the OFT believes couldpotentially be raised by the transaction. This step neither increases nordecreases the likelihood of referral but simply reflects the wealth ofinformation that has to be assimilated by the OFT in order that it can reach aninformed decision. It is therefore possible that the approval process will takelonger than originally anticipated with a corresponding potential delay tocompletion.Investor Relations: Louise Breen Director, Investor Relations +44 20 7315 4460 Craig Thornton Manager, Investor Relations +44 20 7315 6225 Media: Press Office Cable & Wireless +44 (0)1344 818 888 Lesley Smith Group Director of Corporate & Public +44 20 7315 4013 Affairs Steve Double Head of Media Relations +44 (0)1344 726 946 +44 (0)7917 067 580 About Cable & WirelessCable & Wireless is one of the world's leading international communicationscompanies. It provides fixed and mobile voice, data, IP (Internet Protocol) andbroadband services to business and residential customers, as well as servicesto other telecom carriers, mobile operators and providers of content,applications and internet services.Cable & Wireless' principal operations are in the United Kingdom, theCaribbean, Panama, Macau and Monaco. For more information about Cable &Wireless, go to http://www.cw.com. ENDCable & Wireless PLCRelated Shares:
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