Cable & Wireless PLC Half Yearly Report For 6 Months Ended 30 September 2009 - Caribbean Revenue Down
http://www.caribbeanpressreleases.com/articles/5784/1/Cable-amp-Wireless-PLC-Half-Yearly-Report-For-6-Months-Ended-30-September-2009---Caribbean-Revenue-Down/Page1.html
S Coward
By S Coward
Published on 05-Nov-09
Nov. 5, 2009 - Since the summer we have seen further deterioration in the Caribbean economy with no immediate signs of improvement.
Revenue down
CHAIRMAN’S STATEMENT
Commenting on the results, Richard Lapthorne, Chairman of Cable and Wireless plc, said:
“Today we have announced a good set of results especially when viewed against the recession. With the emerging signs of more settled conditions in the financial markets, the Board believes that the Group is ready to separate into its two operating businesses, Worldwide and CWI and drive further value for shareholders. We are keen to push ahead as soon as possible and further details will be
published before the end of November.
“Worldwide’s performance in the first half of 2009/10 – growing market share and order book, winning new customers, strengthening its customer service and generating over £200 million of EBITDA – says much about how well positioned it is for the future.
“CWI delivered creditable results in the first half of 2009/10, with EBITDA in line with last year at constant currency. Panama, Macau and Monaco & Islands performed well, each of them increasing EBITDA year on year – no mean achievement in the midst of a global recession. Since the summer we have seen further deterioration in the Caribbean economy with no immediate signs of improvement. Consequently, despite robust management action, we are reducing EBITDA guidance for 2009/10. Nevertheless, CWI remains strongly cash generative.
“We are continuing with our progressive dividend policy and recommending an interim dividend of 3.16 pence per share – an increase of 12%. Subject to trading in the second half, we expect to pay a full year dividend of 9.50 pence per share, an increase of 12%, demonstrating our confidence in the current performance and the future potential of both Worldwide and CWI.”
Caribbean
• Revenue down 10% to US$427 million
• EBITDA down 15% to US$132 million at a margin of 31%
• Market leadership maintained
Trading conditions in our Caribbean operations continue to be challenging: tourist arrivals have seen a double digit decline in most of the tourist destinations in which we operate, GDP is forecast by the IMF to decline across the region for this year and next and unemployment is increasing. In the face of this intensifying economic recession, we have maintained our mobile market leadership and grown our mobile and broadband customer bases.
A strengthened management team has started the next phase of the ‘One Caribbean’ programme, to create an enhanced customer centric business and culture, with a focus on strengthening our competitive position and further reducing our costs.
In the first half of 2009/10, revenue decreased by 10% to US$427 million with fixed line voice revenue particularly affected by the recessionary environment. International voice revenue fell by 31% to US$38 million primarily driven by lower volume of minutes reflecting the global recession, continued fixed to mobile substitution and increased VOIP usage. Domestic voice revenue decreased by 12% to US$118 million as volumes of minutes declined.
We maintained our mobile market share and saw an increase in postpaid revenue. However, prepaid revenue decreased due to a fall in average revenue per user (ARPU) as a result of a more competitive pricing environment and lower usage. Blended ARPU fell by 11% compared with the same period last year as a result of the current trends in prepaid mobile. Roaming revenue also decreased, particularly from tourist driven inbound traffic. As a result, mobile revenue fell by 8% to US$162 million.
We maintained our gross margin as a percentage of revenue at 75%. Gross margin fell by 10% to US$319 million reflecting lower revenue. Operating costs of US$187 million are 6% lower than in the first half of 2008/09 primarily as a result of a reduction in staff costs. The ‘One Caribbean’ programme has delivered a reduction in headcount of 881 compared with the same period last year. Whilst this had the effect of driving a 12% reduction in staff costs, the maintenance of service quality resulted in increased costs in other areas.
As a result, the impact of our cost reduction drive will not be fully seen in the 2009/10 results and may well take longer to come through than we originally anticipated. Operating costs in the first half of 2009/10 were 14% higher than the second half of 2008/09. This was due to several one off items in the second half of 2008/09, such as increased pension credits in Jamaica that did not recur in the first half of 2009/10. The reduction in EBITDA of 15% to US$132 million essentially reflects the revenue fall.
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Commenting on the results, Richard Lapthorne, Chairman of Cable and Wireless plc, said:
“Today we have announced a good set of results especially when viewed against the recession. With the emerging signs of more settled conditions in the financial markets, the Board believes that the Group is ready to separate into its two operating businesses, Worldwide and CWI and drive further value for shareholders. We are keen to push ahead as soon as possible and further details will be
published before the end of November.
“Worldwide’s performance in the first half of 2009/10 – growing market share and order book, winning new customers, strengthening its customer service and generating over £200 million of EBITDA – says much about how well positioned it is for the future.
“CWI delivered creditable results in the first half of 2009/10, with EBITDA in line with last year at constant currency. Panama, Macau and Monaco & Islands performed well, each of them increasing EBITDA year on year – no mean achievement in the midst of a global recession. Since the summer we have seen further deterioration in the Caribbean economy with no immediate signs of improvement. Consequently, despite robust management action, we are reducing EBITDA guidance for 2009/10. Nevertheless, CWI remains strongly cash generative.
“We are continuing with our progressive dividend policy and recommending an interim dividend of 3.16 pence per share – an increase of 12%. Subject to trading in the second half, we expect to pay a full year dividend of 9.50 pence per share, an increase of 12%, demonstrating our confidence in the current performance and the future potential of both Worldwide and CWI.”
Caribbean
• Revenue down 10% to US$427 million
• EBITDA down 15% to US$132 million at a margin of 31%
• Market leadership maintained
Trading conditions in our Caribbean operations continue to be challenging: tourist arrivals have seen a double digit decline in most of the tourist destinations in which we operate, GDP is forecast by the IMF to decline across the region for this year and next and unemployment is increasing. In the face of this intensifying economic recession, we have maintained our mobile market leadership and grown our mobile and broadband customer bases.
A strengthened management team has started the next phase of the ‘One Caribbean’ programme, to create an enhanced customer centric business and culture, with a focus on strengthening our competitive position and further reducing our costs.
In the first half of 2009/10, revenue decreased by 10% to US$427 million with fixed line voice revenue particularly affected by the recessionary environment. International voice revenue fell by 31% to US$38 million primarily driven by lower volume of minutes reflecting the global recession, continued fixed to mobile substitution and increased VOIP usage. Domestic voice revenue decreased by 12% to US$118 million as volumes of minutes declined.
We maintained our mobile market share and saw an increase in postpaid revenue. However, prepaid revenue decreased due to a fall in average revenue per user (ARPU) as a result of a more competitive pricing environment and lower usage. Blended ARPU fell by 11% compared with the same period last year as a result of the current trends in prepaid mobile. Roaming revenue also decreased, particularly from tourist driven inbound traffic. As a result, mobile revenue fell by 8% to US$162 million.
We maintained our gross margin as a percentage of revenue at 75%. Gross margin fell by 10% to US$319 million reflecting lower revenue. Operating costs of US$187 million are 6% lower than in the first half of 2008/09 primarily as a result of a reduction in staff costs. The ‘One Caribbean’ programme has delivered a reduction in headcount of 881 compared with the same period last year. Whilst this had the effect of driving a 12% reduction in staff costs, the maintenance of service quality resulted in increased costs in other areas.
As a result, the impact of our cost reduction drive will not be fully seen in the 2009/10 results and may well take longer to come through than we originally anticipated. Operating costs in the first half of 2009/10 were 14% higher than the second half of 2008/09. This was due to several one off items in the second half of 2008/09, such as increased pension credits in Jamaica that did not recur in the first half of 2009/10. The reduction in EBITDA of 15% to US$132 million essentially reflects the revenue fall.
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