Cable & Wireless hit by competition

The recovery of Cable & Wireless took a knock today after the telecoms operator reported a 9% year-on-year decline in first quarter revenues.

C&W blamed strong competition and negative exchange rate movements for the fall, which emerged just over a month after the global operator cheered investors with lower losses and a resumption of dividend payments.

The company also halted a three-year slide in UK sales, although today it said revenues in its home region for the three months to June 30 had been 4% lower than the previous quarter and flat on a year earlier.

Despite the drop – which sent shares down almost 3% in a strong market – C&W said cost reduction measures taken last year would help to offset the impact of the “highly competitive” UK market.

Chief executive Francesco Caio, who is a third of the way through a three year restructuring programme, said progress was still being made in efforts to benefit from growth areas such as broadband.

He added: “In the UK our priority is to manage efficiently existing services whilst laying the foundations to participate in growth areas.

“These priorities are closely aligned with trading conditions that remain very challenging across all markets.”

Mr Caio has dramatically cut overheads – including in the UK where staff numbers were reduced by 23% last year to 4,398 – and acted to ensure the operation is focused on key customers in the business market.

He added the drop in UK revenues was in line with expectations “given the difficult trading conditions we had anticipated going into this year and which we expect to persist looking forward”.