C&W sits on cash pile

May 16, 2001
Web posted at: 1209 GMT

LONDON (CNN) -- British telecom company Cable & Wireless says it has a massive advantage in its sector because of the £6 billion cash mountain it is sitting on.

Chief executive Graham Wallace announced on Wednesday it would ask shareholders for permission to buy back up to 15 percent of its stock to reduce its cash reserves.

But he gave no indication that C&W would take up the option in the near future.

"It's a bit of good housekeeping, it gives us more flexibility going forward," he explained to CNN.

"But, right now, we see [the cash] as a massive advantage at this very turbulent time in the sector."

C&W has built its war chest by focusing on data services for business and disposing of non–core assets.

It sold its Australian business Optus to Singapore Telecommunications for $9 billion (£6.3 billion) in cash and shares earlier this year and paid $340 million for Web infrastructure and services provider Digital Island this week.

On Wednesday, it announced net profits fell 29 percent in the year ending March 31 to £2.63 billion ($3.7 billion), or 95.4 pence a share, from £3.72 billion, or 150.9 pence, a year ago. Sales fell 12.1 percent to £8.45 billion.  

Underlying revenues for its IP (Internet Protocol) data networks and services for corporations rose 41 percent to £881 million.

The company said in the U.S. "revenue growth was constrained by severe pricing pressure in the IP access market, the slowdown in the U.S. dot.com market and limits on network capacity."

C&W said its expects the second half of its financial year "will be significantly better than the first six months," underlining analyst expectations that the U.S. economy may begin to recover by the fourth quarter of this year. 

C&W, which is also reported to be interested in the U.S. Web-hosting company Exodus, said it may continue its bargain hunting among the many data hosting companies and networks that are struggling to survive because of over-expansion, the falling price of bandwidth and the less-than-expected demand for their services.

Cable & Wireless to raise $1.5 bn from sale of HK Internet and telecom firm
Apr. 2, 2001
Cable & Wireless beats forecasts with $773M half
Nov. 15, 2000

C&W opens war chest - May 14, 2001
Singtel says Optus bid is on track – May 9, 2001
Cable & Wireless

Note: Pages will open in a new browser window

External sites are not endorsed by CNN Interactive.