A review of the latest half year report recently released by Cable & Wireless for the period April to September 2015.
Last week Cable & Wireless Communications plc (CWC) published a report on its operations covering the first half of financial year, that is the period April to September 2015. Without a doubt, the firm has realised a very positive performance, with revenue and EBITDA each increasing by around 4% when compared with the same period in the last financial year.
Although much of the focus in the media has been on the increase in CWC profits, there are some additional and perhaps even more interesting items that can be gleaned from the report, which begin to highlight, among other things, the likely direction firm, along why interest from other entities, such as Liberty Global, might be occurring. Four takeaways are outlined below..
1. The Columbus acquisition has been good for CWC
Although CWC paid USD 1.85 billion to acquire Columbus International, which operated brands such as Flow, Columbus Business Solutions and Columbus Networks, just six months after completing the sale, its appears that the firm is already realising some benefits. In its report, CWC mentioned that following the Columbus acquisition, it has been able to begin to diversify its offerings and strengthen its presence in certain markets, all of which have contributed to its much improved financial standing at the 2015/2016 half year. More importantly, it anticipates an even stronger performance by year end.
2. Positive results are being realised from its strategic imperatives and Project Marlin
Last year, CWC revised its strategic imperatives to focus on six areas: driving to mobile leadership; fixed-mobile convergence; video and content leadership; growing its B2B and B2G business; building a leading wholesale network; and delivering successful integration. Throughout the half year report, those priorities were being referenced continually, which suggests that they have been at the forefront of the firm’s approach to its business – in practice – and in turn can be directly attributed to the results achieved.
Additionally, and possibly to supplement its new strategic focus, CWC launched Project Marlin last year, a new capital investment programme that would add an extra USD250 million over three years to its standard level capital expenditure, and would focus on strengthening “ its mobile and fixed-line services in the Caribbean and Latin American” markets (Source: Financial Times). From the report, it would appear that the firm has been making some progress in upgrading its fixed and mobile infrastructure across the region, which would have (in some part) contributed to increased traffic and customers on its networks.
3. CWC is getting lean
In merging its operations with that of Columbus International, along with the general pressures to better manage costs, CWC has been actively focussing on streamlining its operations, both in terms of infrastructure and personnel. It is also part of its strategic imperatives, under ‘delivering successful integration’, which would include reducing costs, along with cross-selling and upselling its services. By the end of the 2015/2016 half year, the firm reported some success on all fronts.
Further, and within the region, the job cuts, following completion of the Columbus International sale, have begun – “560 employees, or about seven per cent of its staff, over the six months to September” (Source: The Gleaner). However, an additional 340 more employees will be separated from the firm by the end of the current financial year (Source: CWC).
4. The Caribbean is still lucrative for CWC
From the financials included in the report, the Caribbean contributed around 46% of the revenue generated, and 50% of the EBIDTA for the entire firm in the 2015/2016 half year. (For CWC, ‘the Caribbean’ comprises Anguilla, Antigua, Barbados, British Virgin Islands, Cayman, Curacao, Dominica, Grenada, Jamaica, Montserrat, St Kitts and Nevis, St Lucia, St Vincent, Trinidad and Tobago and Turks and Caicos (Source: CWC)).
Further, the average revenue per user (ARPU) in the region has remained relatively good. in comparison with other local locations, although the GDP (Gross Domestic Product) growth rate has not fully recovered from the economic downturn that occurred a few years ago. In essence, Caribbean customers are still prepared to pay for telecoms services although their countries’ economies might not be as robust as they had been in the past.
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