Cable & Wireless Plc was in a confident mood at the presentation of its results for the year to March, buoyed chiefly by the knowledge that Mercury Communications is now profitable. The group posted pre-tax profits of UKP356m, a rise of 5%, on turnover that increased by a more marginal 2% to UKP93m. Regional trading profit increased by UKP22m despite adverse exchange rates of UKP45m. But chief executive Sir Eric Sharp expressed some concern at the group’s vulnerability to fluctuations in currency rates which he hopes will be dampened by the increasingly dominant role to be played by the three-year-old UK arm, Mercury Communications Ltd. Mercury’s losses for the year have been cut back to UKP11m from from UKP19m, but managing director Gordon Owen was able to announce that: Mercury is profitable and has been trading profitably since the back end of the 1987/1988 year. Owen revealed that Mercury’s recently won licence to operate public pay phones would materialise in a clutch of call boxes appearing on an unnamed London station at the end of July. This would multiply to a 400 target by the end of the year, said Owen, who also claimed that the volume of traffic on Mercury’s core network – Mercury’s bread and butter activity – has increased by seven times with no signs of slowing down. Despite Owen’s great bullish feelings about our future he would not talk turnover or profits, beyond saying that Mercury would grow 11 times between now and 1992. The profile of the Asia and Pacific group as the key contributor to the group is diminishing with the proportion of the revenue it earned taking a dip. The trend will continue as C&W looks increasingly to the Western Hemisphere to come up with the goods – it earned 16% of the group’s profits compared with 11% for the equivalent period last year – with the onus on Mercury. The group is also experiencing an upsurge in demand in the Caribbean following the digitalisation of the area and the stimulation of international direct dial calls which has been accompanied by a boom in tourism. C&W capital expenditure outlay hit UKP423m last year, mostly going on reequipping the company around the globe to ensure that its equipment has a revenue-producing life 25 to 30 years ahead. Sir Eric refused to comment on his company’s intention regarding a rumoured takeover bid for Racal beyond the fact that C&W owns 2.8% of Racal. The company was no more forthcoming about the future role in the PTAT-1 transatlantic fibre optic cable venture of Nynex Corp. Participation of the Regional Bell operating company depends on a waiver being granted by Judge Greene, who is charged with overseeing the break-up of the Bell System, and apparently no ruling is expected for a few months.
