Cable & Wireless to unveil demerger plans

Telecoms group Cable & Wireless is planning to announce a £4.5bn (€5.7bn) demerger of its international operations as early as this month, according to a report today.

The firm, which has been widely speculated to be planning a break-up, is thought to be holding a board meeting to discuss the plans on September 29 with a view to unveiling details soon after.

The Sunday Telegraph said that the plans will see shareholders receive one share in its UK division and one share in Cable & Wireless International for every one they own.

C&W fuelled rumours of an imminent spin-off of the international arm in May when it said it was “demonstrating the necessary momentum” for it to consider the next steps towards boosting shareholder value.

It has already taken action to put its main UK defined benefit pension scheme on a firmer footing, with the scheme now fully funded following the latest actuarial valuation.

And it further de-risked the pension scheme earlier this month by offloading £1bn (€1.3bn) of liabilities under a deal with insurer Prudential.

C&W reported better-than-expected annual results in May, posting underlying earnings of £605m (€764m) for the year to March 31, again of 23% on a year ago.

It has reorganised its operations in recent years so it is focused on serving larger corporate customers with higher margin internet services.

It has actively shed lower margin business, resulting in a 34% drop in Europe, Asia and US customer numbers to 6,544 at the end of March.

But the turnaround plan saw the UK division – which has been renamed Cable Europe, Asia and the US – return to revenues growth with a sharp reduction in operating costs.

Margins for the division also improved to 12% from 6% a year earlier.

Its international arm provides mobile, broadband, domestic and fixed line services in 39 countries.

C&W declined to comment.