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November 25, 1987

CABLE & WIRELESS: MERCURY CHIEF SLAMS OBSTRUCTIVE BRITISH TELECOM

By CBR Staff Writer

Mercury Communications boss Gordon Owen yesterday attacked British Telecom for being exceptionally slow to interconnect the two networks. But he declined to say if Telecom was being deliberately obstructive or was just unable to cope with demand. Under the rules drawn up by Oftel, British Telecom is required to carry out the connection within six months of being asked or to give Mercury three months notice that it will unable to fulfill the request in time. According to Owen, Telecom is waiting until the last possible day before saying it won’t be able to make the connection date and in a recent case offered to do the work two years hence. Not surprisingly, Mercury found that unacceptable and is pressing Oftel to take action against the quasi-monopoly. The Owen attack came as Mercury’s parent Cable and Wireless Plc unveiled first half pre-tax profits up just 3% at UKP165m on turnover 6% ahead at UKP467m. The figures when expressed in sterling hide a strong performance throughout the business. In local currencies, trading profit was up by 16%. Adverse currency movements are estimated to have reduced the group’s profit by as much as UKP14m. Investment income is also down, by around UKP15m, as a result of increased capital expenditure. Of the UKP181m spent in the half, Mercury took UKP93m and the Hong Kong operations UKP40m. Mercury is still on target for month-by-month profits after depreciation in the current half, and will be profitable throughout 1988-9. Its turnover for the first half was UKP17m, up from UKP3m last year. Profits at the Hong Kong Telephone Company and Cable and Wireless Hong Kong, which between them contribute 75% of the group total, were up by 25% over last year and are expected to continue growing at a similar rate when the recently announced consolidation is completed next year. Other bright spots for Cable and Wireless were the Caribbean – agreement in principal has been reached for C&W to run Grenada’s network – the Seychelles, and the US where the company is currently combining its subsidiaries. All the geographical regions within Cable and Wireless are going well and Mercury should start to make a contribution fairly soon, but measured in sterling, the company’s profits do not look likely to shoot ahead unless the dollar recovers from its present levels.

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