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November 16, 1988

MERCURY MOVES INTO PROFIT AS CABLE & WIRELESS PLC GROWS PROFITS 20% AT INTERIM STAGE

By CBR Staff Writer

A move into profitability at Mercury Communications Ltd was the highlight of Cable & Wireless Plc’s half-year results published yesterday. Mercury turned in an operating profit of UKP4.0m, against a loss in 1987 of UKP11m, on turnover that increased to UKP48m. Plans are afoot to expand the public telephone network, and Mercury’s managing director Gordon Owen said he expected the number of public pay phones to reach 400 before the end of the year. Group pre-tax profit rose 20% to UKP198m on turnover up 9%, with all regions returning increased profits, apart from the African and the Middle East division. UK operations seem to have turned the corner, mainly on the back of Mercury, and managed an operating profit of UKP9m against a loss last time of $5m. Though the prominence of the Asia and Pacific division is diminishing it still accounted for approximately 60% of group turnover, contributing UKP141m to operating profits. Overall regional turnover and trading profits have increased by 9% and 21% respectively despite adverse movements in exchange rates of UKP40m and UKP17m. Following the sale of its interest in Racal Electronics Plc, which resulted in an exceptional gain of UKP13m, some were hoping that Cables would take the opportunity of yesterday’s interims to announce an increased offer for Telephone Rentals Plc. The initial 305p cash per share offer, pricing the company at UKP248m, had a derisory reception from Telephone shareholders, with a 0.5% acceptance by first close. Cables extended the bid last week and it would seem that it is now waiting for Telephone to publish its end of year profit forecast before making another move.

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