Cable & Wireless sales shock

By THIS IS MONEY
Updated:

 

SHARES in Cable & Wireless slumped today after the telecoms giant reported a sharp slowdown in sales at its retail business in the UK.

The company, which agreed to acquire smaller rival Energis this summer, shocked analysts with the severity of its trading difficulties in the UK as tough trading conditions and pricing pressures took their toll.

Cable also warned the process of gaining regulatory approval for its £700m deal to buy Energis looked set to take longer than expected and that a number of cost reduction initiatives were on hold as a result.

Shares were more than 14% lower at 121p (down 20¾) as more than 100m changed hands.

C&W said total revenues in the six months to September 30 were 6% lower at £765m. While this was in line with expectations, C&W said more of the sales were in lower-margin carrier services work, such as for other telecoms providers.

In retail, where C&W provides services for customers including Marks & Spencer, sales were 13% lower at £375m. In a statement, C&W said: 'Our industry and our activities in the UK are at a time of transition from legacy products to IP technology using Next Generation Networks. The next step phase of performance development is planned to take place as a result of the intended combination of the UK business with Energis. Early in the New Year we will update investors on our plans in the UK and set out short and longer-term targets.'

Investec analyst Christian Maher said: 'Whilst we are not surprised by the fact that UK trading is weak, the sheer level of deterioration surprises us in the business.'

Cable & Wireless provides fixed and mobile voice, data, IP (Internet Protocol) and broadband services to business and residential customers, as well as services to other telecom carriers, mobile operators and providers of content, applications and internet services.

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