Cable & Wireless Communications reported a fall in pre-tax profit in the six months through September as a result of exceptional charges related to the company’s cost reduction program. However, mobile revenue was up 3 percent amid greater market penetration and growing demand for mobile data, particularly in Panama and the Caribbean.
Profit before tax was $35 million, compared with $55 million a year ago, following exceptional charges related to the group’s cost reduction activities, Cable and Wireless said. This included a $55 million one-off charge related to redundancy payments.
The first half-year was characterized by the performance of the company’s mobile business and progress on its cost reduction program, said Chief Executive Officer Tony Rice. “Growth in mobile revenue and [earnings before interest, tax, depreciation and amortization] of 3 per cent for the group was a strong result given competition and other market challenges we faced,“ he said.
The earnings increase was largely driven by a return to growth in Panama and operating cost reductions of 6 percent in the Caribbean region. The company’s cost reduction program is focused mainly on the Caribbean, where operating costs were reduced by US$18 million.
This process will be accelerated to meet a US$100 million target, Mr. Rice said. “Centralizing our regional operations in our new Miami office will be a key driver and I’m pleased to report we’ve made good progress in establishing our new regional hub.”
Mobile data revenue increases
Mobile data revenue increased 29 percent, and Cable and Wireless will continue its investment in the business segment as the company launches Long-Term Evolution networks in the Cayman Islands, the Bahamas and Monaco in the second half of the year. Cable and Wireless’ customer base grew 23 percent in Jamaica, where mobile service revenues were up 14 percent.
Broadband subscribers increased by 5 percent across the Caribbean region with growth in most key markets. Cable & Wireless increased the number of subscribers to its internet-based television service LIME TV in three markets by 13 percent to 21,000 compared to last year. This growth was driven by the provision of services in Barbados and Cayman and is expected to continue as the fiber roll out in these markets gathers momentum.
Meanwhile, fixed voice revenue continued to be adversely impacted by declining voice traffic and lower rates. Enterprise, data and other revenue declined by 10 percent, mainly due to accounting changes following the outsourcing of the LIME directory businesses.
Group revenue fell by 3 percent to $935 million.
The group recognized a gain of US$1.011 million following the completed disposals of the Macau and Islands businesses, excluding the Seychelles.
“We have largely completed our disposal process, with the Seychelles transaction expected to complete this year,” Mr. Rice said.
As a result the company is now focused on the Caribbean and Latin America.
However, the planned disposal of the Monaco business stalled. “We have agreed to unwind the agreement we announced with Batelco for a minority stake in our Monaco business at the same time,” Mr. Rice said. “Monaco remains a strong and growing operation within our group and we are reviewing our options for the business.”
On a constant currency basis, revenue for the group was 2 percent lower and EBITDA was 3 percent higher than the prior year.
The company announced in October that chief executive officer Tony Rice will be succeeded by Phil Bentley, a former managing director at British Gas, from Jan. 1, 2014.