Cable & Wireless to cut costs in Caribbean to protect profitability

Updated: 07:25 EST, 17 July 2009

Telecoms group Cable & Wireless reiterated its guidance for full-year core earnings on Friday, in spite of pressure in the Caribbean, where it will cut costs as fewer tourists are using its services.

Domestic fixed line minutes fell by 9 per cent in the first quarter in the Caribbean, while average revenue per mobile user is down 8 per cent.

'In the face of this, we are accelerating and stepping up our cost reduction programmes, though there is a lead time for such actions to take effect,' it said.

Caribbean crush: C&W is accelerating its cost reduction programmes

'In the first quarter of 2009/10, our two businesses continued to make progress despite a more challenging economic backdrop,' Chairman Richard Lapthorne said in a statement.

Britain's second-biggest corporate telecoms provider said its forecast for group earnings was approximately £1.03billion ($1.69billion), based on an exchange rate of $1.50 to £1.001.

The guidance, which has not changed since it was published in May, knocked shares in Cable & Wireless by around 10 per cent when it was first announced and they were up 1.5 per cent in early trading on Friday.

Analysts said the statement was still quite disappointing and did not change anything from May.

The full-year guidance comprises earnings input from the Worldwide unit, which used to be called Europe, Asia and U.S., of approximately 430 million pounds, an increase of approximately 32 per cent on 2008/09.

Its CWI unit, which operates in the Caribbean, Panama, Macau and others, is forecast to show an increase in earnings of around 6 per cent in constant currency terms to approximately $935million, while its smaller Central unit will record a cost of about £28million.