Cable & Wireless: Demerger and good results

graeme at 7:52 a.m. Thu 05 Nov 2009

Cable and Wireless has, as rumoured, announced its intention to demerge together with its half year results.

As expected (albeit mis-reported by some of the media) the company is being split into its CWI and Worldwide divisions. CWI consists of small, national incumbent telecoms businesses in the Caribbean, Monaco, Macau, the Maldives (at least until they disappear beneath the waves) and Panama. Worldwide is a rather more exciting supplier of carrier services and business telecoms in Europe (especially the UK), North America and Asia.

The results are the best Cable & Wireless has produced for some time:

EPS has not risen in line with EBITDA largely because of higher finance costs and lower interest income.

Last para amended at 8.40am

At the current price of 138p the shares would produce a good yield of 6% assuming the final dividend is raised by the same proportion as the interim. The EPS would be fairly undemanding at around 12×.

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