For the six months ending September 30, the company posted net income of 125m pounds ($217m), down from 239m pounds ($415.6m). Sales were 1.48bn pounds ($2.57bn), up from 1.47bn pounds ($2.55bn) in the year-ago quarter.
Shares in the company rose 2.74% to 122p ($2.12) on the London Stock Exchange on Tuesday afternoon.
Cable & Wireless also announced that it now expects to complete the Energis deal on November 11, after earlier fears that the completion of the acquisition would be delayed due to longer than expected approvals from the UK Office of Fair Trading. It was in the middle of August that C&W finally announced the acquisition of corporate telecoms rival Energis for as much as 709m pounds ($1.25bn).
C&W is the UK’s second largest fixed-line telecoms group, and the purchase of Energis will increase its UK fixed-line market share from 9% to just over 13%. The combined company is also expected to generate sales of more than 2bn pounds ($3.50bn) a year. The acquisition will also give C&W more scale to compete more effectively with BT Group Plc.
Yet after the deal, C&W’s share price fell 16% to 119 pence ($2.09) in October following a warning that sales would fall by 6% in its core market. To put into context, the drop saw C&W lose almost a fifth of its value and it was the biggest fall in its stock price for nearly three years.
C&W continues to find the UK a tough market with sales down 5%, as the shift to IP-based services from higher margin legacy products such as standard fixed-line continued. C&W had to rely on its overseas operations to prop up the UK unit. Revenue outside the UK rose 10%, and those assets accounted for roughly 40% of group sales.
C&W has been around now for close on to 133 years, and its empire once spanned Europe, Hong Kong, and the US. It makes most of its money in the UK by providing services to other telecoms companies. However, in the late 1990s the group was viewed as poorly run, overly bureaucratic, and cost-heavy. It made a series of disastrous acquisitions and chief executive Francesco Caio was brought in to implement a three-year restructuring program that included cutting thousands of jobs. Under his leadership, C&W has pulled out of the US and Japan markets to focus on its UK and Caribbean-based national telecoms operations.
