Cable and Wireless blames Caribbean operations for losses

The British telecommunications company, Cable & Wireless Communications (CWC) Plc, is blaming the struggle of its Caribbean businesses for the biggest drop in six weeks in London trading.



“The one region that remains very difficult is the Caribbean,” Chief Executive Officer Tony Rice said in a statement, adding that the region continues to be “challenging with tourist spend and hence consumer and business disposable income significantly below historic levels”.



Cable & Wireless Communications, which split from its parent company in March last year, provides mobile and fixed-line services in the Caribbean and Panama.



Earnings before interest, taxes, depreciation and amortization in the fiscal second half ending March 31 will be about the same level as the US$115 million reported for the first half, the company said.



“CWC’s underlying cash generation is insufficient to justify either the share price or fund the CWC dividend,” said Mark James, a telecommunications specialist.



“We expect consensus estimates to continue to decline and remain sellers with a 27 pence target price,” he added.



The stock declined as much as 4.3 per cent to 47.15 pence, the biggest drop since December 30.



CWC said it signed an agreement to buy 51 per cent of Bahamas Telecommunications Company (BTC) for US$210 million. BTC is the leading mobile- phone, fixed-line and broadband operator in the Bahamas.



“We fret about the costs of restructuring, and how difficult it may prove to lose staff. There has been well-documented backlash from unions to date.”