In the wake of the BT-MCI alliance, Cable & Wireless is holding talks with US telecomms operators, notably Nynex. The company, which reported a nine per cent hike in half year revenues on Wednesday, said it was not urgently seeking a partner but was having "good business discussions".
Chief executive Richard Brown told Reuters: "Where other companies have brought us opportunities to look at, we are responding to those ideas." C&W has already agreed to merge its Mercury subsidiary with three cable operators including Nynex' Cablecomms Group, so many analysts believe it would be logical to extend the partnership.
Cable & Wireless, the UK's second largest telecomms player, reported revenues - excluding associate companies - up nine per cent to #2.9 billion for the half year to 30 September 1996. C&W, which owns a controlling stake in Hong Kong Telecom and Mercury Group, saw sales including associate companies rise 14 per cent to #3.4 billion.
Pre-tax profits, excluding the effects of exceptional items during the first quarters of 1995 and 1996, rose nine per cent to #673 million. Profits would have been higher had it not been for losses at the group's German associate, Vebacom. Taking into account exceptional items - including a profit of #61 million from part-disposal of assets - profits declined 10 per cent from #815 million to #734 million. This was mainly because profit was exceptionally high in the comparable period last year, because of asset disposals. Profits after tax fell seven per cent to #581 million.
C&W warned that the company's profits are exposed to exchange rate fluctuations. "Had last year's average rates of exchange applied to this period's reported currency results, the operating profit would have been some #18 million lower," the company said.
Earnings per share dropped from 19.6 pence last year to 16.1 pence, due partly to the inclusion last year of exceptional profit-taking on the sale of assets. Excluding exceptional items, earnings per share rose from 13 pence to 14.3 pence. Dividends per share fell slightly from 3.08 pence to 3.4 pence.
Operating costs, at #2.2 billion, were six per cent higher than in the same period last year, due partly to a nine per cent rise in outpayments to other telecomms carriers.
C&W last month announced two major moves to strengthen its position in the UK and in Europe. The company said it was to merge operations of Vebacom, the German telecomms supplier in which it has a 45 per cent stake, with those of the German supplier RWEcom. The result will be a telecomms services company 51 per cent owned by Vebacom, and a network company 51 percent owned by RWEcom.
The other major deal is the cable joint venture, Cable & Wireless Communications, in which C&W will own 52.6 per cent, in a strong challenge to BT in the domestic market.
Brown said: "We have delivered strong competitive performance during the first half, and I remain confident about the outlook."
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