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Cable&Wireless Comms CWC Half Yearly Report


Attachment:

  Cable&Wireless Comms (CWC) - Half Yearly Report

RNS Number : 6065Q
Cable & Wireless Communications PLC
08 November 2012
 



 

ANNOUNCEMENT

8 November 2012

                                       

            CABLE & WIRELESS COMMUNICATIONS PLC HALF YEARLY REPORT

                  FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012

                                       

                Trading in line, full year outlook maintained

                                       

 

Key Highlights

§ Mobile revenue up 9%, including mobile data revenue growth of 36%

§ Strong mobile subscriber growth in Jamaica reflecting new competitive
environment

§ Mobile leadership in Panama extended

§ Good performance in Macau and operational progress in The Bahamas

§ Caribbean restructuring programme underway; operating costs down 7%

§ Discussions on portfolio reshaping

§ Interim dividend of US1.33 cents per share

                                       

                                 Six months ended   
US$m                            30 September 2012    Change     
Revenue                                     1,431           1%^1
EBITDA                                        445           2%^1
Net income                                    120           11% 
Earnings per share (adjusted)                 3.4c       (0.4)c 
Earnings per share                            1.7c       (0.4)c 

 

^1 At constant currency

Note: EBITDA and adjusted earnings per share are defined in the footnotes on
the following pages, reconciliations of EBITDA and adjusted earnings per share
are provided on page 27

 

 

 

Outlook

We maintain the guidance given at the full year, and expect:

§ Group EBITDA to be similar to 2011/12

§ Capital expenditure approximately US$350 million in 2012/13

§ Cash exceptional costs in 2012/13 between US$30 million and US$35 million

§ Dividend guidance for FY 2012/13 at US4 cents per share

 

 

Commenting on the Group results, Tony Rice, Chief Executive of Cable &
Wireless Communications Plc, said:

 

"We have delivered a respectable performance in the first half.  Despite a
challenging period for the telecoms industry as a whole, our Group has posted
a balanced performance, with EBITDA rising 2%.

 

"We have seen momentum continuing to build for our mobile data services, and
this is driving our mobile service revenue.  Significant investments in high
speed, mobile data capable networks across the Group last year are already
delivering returns, and we expect the growth to continue.  Voice revenue,
however, continues to decline and we are delivering on our plan to reduce
costs to mitigate this.

 

"Private sector and government enterprise pipelines retain a healthy potential
although governments continue to be hesitant before launching the new
programmes which we are there to support.

 

"We saw improving results in Jamaica, where our 'fightback' campaign is
gathering momentum following regulatory changes made by the Government.  We
have seen good traction in the key market of prepaid mobile and the business
is re-energised.  We are also delivering on our potential in The Bahamas,
where we have been investing in new networks and introducing new services,
particularly mobile data.

 

"We have also made progress on our strategy to reshape the business.  During
the first half we exited our West African enterprise business, and confirmed
discussions regarding possible transactions involving our Monaco & Islands and
Macau business units.  These steps are in line with our stated plan to focus
our management capability and future investment on the Pan-American region
where we have scale, synergy and strong market positions as well as several
growth economies.

 

"Despite continuing competitive and economic pressures in many markets, we are
well placed to achieve the outlook indicated at the 2011/12 results."

                          Analysis of Group results

                                          Six months   Six months
                                             ended        ended  
                                        30 September 30 September
US$m                                          2012         2011   % change    
Revenue                                      1,431        1,442           (1)%
Gross margin                                   933          966           (3)%
Operating costs                               (488)        (523)           7% 
EBITDA^1                                       445          443            0% 
Depreciation and amortisation                 (170)        (175)           3% 
Net other operating expense                     (5)          (7)          29% 
Joint ventures and associates                   12           13           (8)%
Total operating profit before
exceptional items                              282          274            3% 
Exceptional items                              (26)         (58)          55% 
Total operating profit                         256          216           19% 
Finance income                                  14            5         nm    
Finance expense                                (91)         (78)         (17)%
Other non-operating (expense)/income           (15)           2         nm    
Profit before tax                              164          145           13% 
Income tax expense                             (44)         (37)         (19)%
Net profit                                     120          108           11% 
Net profit before exceptional items            144          163          (12)%
Net profit attributable to:
Owners of the Parent Company                    43           52          (17)%
Non-controlling interests                       77           56           38% 
Capital expenditure^2                         (177)        (153)         (16)%
Operating cash flow^3                          268          290           (8)%
EPS                                             1.7c         2.1c
Adjusted EPS^4                                  3.4c         3.8c
Customers in subsidiaries (000s)
Mobile                                       4,391        4,907  
Broadband                                      552          553  
Fixed                                        1,391        1,425  

 

^1 EBITDA is defined as earnings before interest, tax, depreciation and
   amortisation, net other operating and non-operating income/(expense) and
   exceptional items
^2 Cash capital expenditure
^3 Operating cash flow is defined as EBITDA less capital expenditure
^4 Adjusted EPS is before exceptional items, gains/(losses) on disposals,
   amortisation of acquired intangibles and transaction costs

 

Revenue was in line with the prior year at US$1,431 million.  Across the
Group, mobile revenues increased by 9%, boosted by growth in mobile data
services.  Macau, our most developed mobile data business, posted a 20% rise
in total revenue, driven by mobile services and smartphone sales.

 

Group EBITDA was similar to the prior year at US$445 million following an
improved performance in the Caribbean and continued strength in Macau.  The
Caribbean performance was driven by mobile customer growth in Jamaica, further
operating performance gains in The Bahamas and a region-wide cost reduction
programme.

 

Adjusting for currency, revenue for the Group was 1% higher and EBITDA 2%
higher than last year.

 

Total operating profit increased by 19% to US$256 million.  There was an
exceptional charge of US$26 million related to the Caribbean restructuring
programme we commenced at the start of the year and where we have made good
progress in the first half.

 

Net profit for the period was up 11% to US$120 million and adjusted earnings
per share were US3.4 cents.  The Board has declared an interim dividend of
US1.33 cents per share, in line with our intentions outlined at the full year
results in May.

 

The Group made good progress in its strategic growth businesses, particularly
mobile data.  Non-voice revenue rose by 36% and now accounts for 26% of Group
mobile service revenue.  Our Panama business saw a 63% increase in mobile data
revenue during the first half as smartphone penetration rose to 26%.  Macau,
the Caribbean and Monaco also delivered strong mobile data revenue growth.  We
expect further growth from this segment across the portfolio.

 

We continued to roll out triple-play services, with pay TV as a key component,
launching a service in Barbados during the period, and in the Channel Islands
and Isle of Man in October.

 

                                   Contacts

 

 

Cable & Wireless Communications  
Investors                        
Kunal Patel                     +44 (0) 20 7315 4083
Mike Gittins                    +44 (0) 20 7315 4184
                                 
Media                            
Lachlan Johnston                +44 (0) 20 7315 4006 / +44 (0) 7800 021 405
Steve Smith                     +44 (0) 20 7315 4070
Neil Bennett (Maitland)         +44 (0) 20 7379 5151

 

REVIEW OF CWC OPERATIONS

 

Income statement

 

                          Panama                Caribbean^1                 Macau              Monaco & Islands^2            Other^3                   Total
                     H1     H1                H1     H1                H1     H1                H1     H1                H1     H1                H1     H1
                 12/13  11/12  Change     12/13  11/12  Change     12/13  11/12  Change     12/13  11/12  Change     12/13  11/12  Change     12/13  11/12  Change    
                  US$m   US$m       %      US$m   US$m       %      US$m   US$m       %      US$m   US$m       %      US$m   US$m       %      US$m   US$m       %    
Mobile             159    156         2%    262    266        (2)%   213    151        41%    118    120        (2)%     -      -       -       752    693         9% 
Broadband & TV      30     30       -        60     62        (3)%    29     28         4%     25     24         4%      -      -       -       144    144       -    
Fixed voice         61     72       (15)%   149    169       (12)%    35     38        (8)%    36     41       (12)%     1      -      nm       282    320       (12)%
Enterprise, data
and other           36     50       (28)%    82     79         4%     33     41       (20)%   101    115       (12)%     1      -      nm       253    285       (11)%
Revenue            286    308        (7)%   553    576        (4)%   310    258        20%    280    300        (7)%     2      -      nm     1,431  1,442        (1)%
Cost of sales      (93)  (106)       12%   (126)  (131)        4%   (192)  (144)      (33)%   (86)   (95)        9%     (1)     -      nm      (498)  (476)       (5)%
Gross margin       193    202        (4)%   427    445        (4)%   118    114         4%    194    205        (5)%     1      -      nm       933    966        (3)%
Operating costs    (78)   (75)       (4)%  (290)  (313)        7%    (31)   (30)       (3)%  (100)  (108)        7%     11      3      nm      (488)  (523)        7% 
EBITDA^4           115    127        (9)%   137    132         4%     87     84         4%     94     97        (3)%    12      3      nm       445    443         0% 
Depreciation and
amortisation       (38)   (37)       (3)%   (76)   (80)        5%    (16)   (16)      -       (34)   (38)       11%     (6)    (4)      (50)%  (170)  (175)        3% 
Net other
operating
(expense)/income     -      -       -        (1)   (10)     nm         -      -       -        (1)     1      nm        (3)     2      nm        (5)    (7)       29% 
Operating profit
before joint
ventures and
exceptional
items               77     90       (14)%    60     42        43%     71     68         4%     59     60        (2)%     3      1      nm       270    261         3% 
Capital
expenditure        (58)   (49)      (18)%   (61)   (50)      (22)%   (19)   (17)      (12)%   (35)   (33)       (6)%    (4)    (4)      -      (177)  (153)      (16)%
Operating cash
flow^5              57     78       (27)%    76     82        (7)%    68     67         1%     59     64        (8)%     8     (1)     nm       268    290        (8)%
Cash exceptional
items                -     (6)     nm        (9)   (29)       69%      -      -       -         -      -       -        (2)    (2)      -       (11)   (37)       70% 
Net cash
interest            (5)    (3)      (67)%    (1)    (1)      -         -      -       -         1     (2)     nm       (69)   (56)      (23)%   (74)   (62)      (19)%
Cash tax           (52)   (27)      (93)%   (19)   (19)      -        (8)    (7)      (14)%    (6)    (5)      (20)%    (4)    (6)       33%    (89)   (64)      (39)%
Headcount^6      1,478  1,578        (6)% 3,677  3,971        (7)%   954    882         8%  1,523  1,642        (7)%   129    152       (15)% 7,761  8,225        (6)%

 

 

   nm represents % change not meaningful
^1 Caribbean includes The Bahamas business from 6 April 2011
^2 Monaco & Islands  comprises operations  in Monaco,  Maldives, the  Channel 
   Islands, Isle of Man,  the Indian and Atlantic  Oceans and Africa  (Afinis 
   disposed 3 August 2012)
^3 Other includes management,  royalty and  branding fees, the  costs of  the 
   corporate centre,  net UK  defined benefit  pension charge  or credit  and 
   intercompany eliminations
^4 Earnings before interest,  tax, depreciation and  amortisation, net  other 
   operating and non-operating income/(expense) and exceptional items
^5 EBITDA less capital expenditure
^6 Full time equivalents as at 30 September

Panama

 

·      Maintained market leadership in mobile, broadband and domestic fixed
voice

·      Mobile revenue growth of 2% in a highly competitive market

·      63% growth in mobile non-voice revenue following launch of high speed
data network

·      Private sector and government enterprise pipelines retain healthy
potential, continued delays

 

               6 months                          6 months   
                  ended        3 months 3 months    ended    3 months 3 months
                    30 Sep ended 30 Sep ended 30      30 Sep ended 30 ended 30
                   2012            2012 Jun 2012     2011    Sep 2011 Jun 2011
Subscribers
(000s)
Mobile^1          1,785           1,785    1,656    2,454       2,454    2,038
Broadband           127             127      129      140         140      141
Fixed               381             381      386      396         396      395
ARPU (US$)^2
Mobile             15.1            15.9     14.4     13.2        12.4     14.0
Broadband          28.1            29.0     27.2     27.2        27.2     27.3
Fixed              26.3            26.5     26.2     30.3        30.6     30.0
Revenue (US$m)      286                               308   
EBITDA (US$m)       115                               127   
Margin%                40%                               41%

 

   Active subscribers are defined as those having performed a
^1 revenue-generating event in the previous 60 days
^2 ARPU is average revenue per user per month, excluding equipment sales

 

Revenue at US$286 million was 7% lower than the same period last year due to
lower enterprise and fixed voice revenue.

 

Mobile revenue at US$159 million rose 2% despite the competitive four player
market and introduction of mobile number portability in November 2011.  An
increase in data penetration from 14% to 26% fuelled strong growth in
non-voice revenue, particularly in the prepaid segment.  This growth more than
offset the decline in mobile voice revenue as the rate per minute remained
under pressure due to competition.  Following the deactivation of low value,
promotion driven customers in the first quarter, total mobile subscribers were
27% lower than last year.

 

Broadband & TV revenue of US$30 million was in line with the prior period.
 Subscribers declined, but ARPU increased as the business focussed on greater
value customers, taking higher speed broadband and premium TV packages.  The
number of pay TV subscribers taking more than one service was over 70%.

 

Fixed voice revenue declined by 15% to US$61 million following a reduction in
the volume of international transit traffic and lower national calling rates.
 The rate of decline in subscriber numbers has slowed as households value
retaining a fixed line to complement other fixed services.

 

Enterprise, data and other revenue at US$36 million was lower than last year
as a result of delayed government programmes in Panama.  This half we
announced both a government project to supply, install and support new systems
to share documents electronically and a two year contract to introduce a
Hospital Information System to improve the administration and patient care in
all of Panama's state funded hospitals.  We continue to explore opportunities
outside Panama.

 

Gross margin decreased by 4% to US$193 million principally due to lower fixed
voice revenue.  As a percentage of revenue, gross margin improved by two
percentage points.

 

Operating costs increased by 4% to US$78 million reflecting higher network and
property costs following expansion of our mobile network.

 

Due to reduced fixed voice and enterprise revenue and higher operating costs,
EBITDA reduced by 9% to US$115 million.

 

Our proportionate ownership of Panama EBITDA for the six months ended 30
September 2012 was 49%.

 

Caribbean

·      Mobile non-voice revenue up 32%, continued roll out of high speed
mobile data networks

·      Mobile subscriber growth of 20% in Jamaica

·      4G/HSPA+ mobile network established and NGN fixed network launched in
The Bahamas

·      Cost reduction programme progressing - headcount down 7% across the
region

 

               6 months                          6 months   
                  ended        3 months 3 months    ended    3 months 3 months
                    30 Sep ended 30 Sep ended 30      30 Sep ended 30 ended 30
                   2012            2012 Jun 2012     2011    Sep 2011 Jun 2011
Subscribers
(000s)
Mobile^1          1,594           1,594    1,491    1,505       1,505    1,529
Broadband           222             222      221      222         222      223
Fixed               713             713      714      728         728      735
ARPU (US$)^2
Mobile             28.0            27.7     28.3     28.7        29.1     28.4
Broadband          42.1            42.6     41.7     42.6        42.7     42.5
Fixed              34.9            34.3     35.4     38.5        38.8     38.3
Revenue (US$m)      553                               576   
EBITDA (US$m)       137                               132   
Margin%                25%                               23%

 

   Active subscribers are defined as those having performed a
^1 revenue-generating event in the previous 60 days
^2 ARPU is average revenue per user per month, excluding equipment sales

 

 

 

Caribbean revenue was 4% down on the prior year leading to a similar decline
in gross margin.  EBITDA improved by 4% following progress in reducing the
cost base.

 

Mobile revenue was 2% lower in the first half at US$262 million.  Handset
sales increased as the business introduced several successful promotions,
although service revenues were weaker mainly as a result of lower postpaid
traffic volumes.  In Jamaica we received an excellent customer response to the
launch of our new reduced rate mobile packages ahead of long awaited changes
to the regulatory environment in July.  To date we have increased our Jamaican
subscriber base by 20% compared to the first half of last year and mobile
service revenue also rose as call volumes and data usage have grown.  Across
the rest of the Caribbean there was continued growth in the postpaid customer
base although prepaid voice revenue was lower as usage decreased.  Mobile data
has seen strong growth with non-voice revenue for the region growing by 32%.

 

LIME TV was launched in Barbados during the first half of this year and we
have added almost 1,300 customers.  Broadband subscribers increased by 3%
excluding Jamaica, where we saw increased competition.  There was a small
reduction in ARPU as rate reductions were introduced to drive customer
adoption resulting in Broadband & TV revenue falling slightly to US$60
million.

 

Fixed line revenue at US$149 million declined by 12%.  There was a 2% decline
in the subscriber base and a fall in ARPU as usage continued to reduce in
favour of alternatives such as mobile and VoIP solutions.  Revenue in Jamaica
was further impacted late in the first half by regulatory changes which
resulted in reduced fixed to mobile retail rates and interconnect revenue.

 

Enterprise, data and other revenue rose by 4% to US$82 million as we saw
growth in corporate data solutions and increased capacity lease revenue
generated from our regional cable investments.

 

Gross margin at US$427 million tracked the revenue performance and was 4% down
compared to last year.

 

Operating costs reduced by 7% compared to the prior period as we realised
efficiencies particularly in our Bahamas business.  In our other businesses we
have commenced a restructuring programme which was announced at our full year
results in May.

 

EBITDA increased by 4% to US$137 million driven principally by operational
progress in The Bahamas and the early benefits from the wider Caribbean
programme.

 

Our proportionate ownership of Caribbean EBITDA for the six months ended 30
September 2012 was 74%.

Macau

 

·      Mobile service revenue up 14%, continued data growth with non-voice now
35% of service revenue

·      Economic growth continues, gaming revenue up 15%

·      EBITDA up 4% on prior year driven by strong mobile performance

 

               6 months                          6 months   
                  ended        3 months 3 months    ended    3 months 3 months
                    30 Sep ended 30 Sep ended 30      30 Sep ended 30 ended 30
                   2012            2012 Jun 2012     2011    Sep 2011 Jun 2011
Subscribers
(000s)
Mobile^1            460             460      434      417         417      402
Broadband           142             142      140      136         136      134
Fixed               173             173      174      176         176      177
ARPU (US$)^2
Mobile             21.8            24.4     19.3     20.9        20.9     21.0
Broadband          33.6            34.0     33.1     33.3        33.0     33.6
Fixed              33.4            33.1     33.6     36.0        36.9     35.0
Revenue (US$m)      310                               258   
EBITDA (US$m)        87                                84   
Margin%                28%                               33%

 

   Active subscribers are defined as those having performed a
^1 revenue-generating event in the previous 60 days
^2 ARPU is average revenue per user per month, excluding equipment sales

 

Revenue increased by 20% on last year largely due to strong mobile handset
sales.

 

Mobile revenue of US$213 million was 41% higher driven by the sale of
smartphones, particularly the iPhone.  Excluding handset sales, revenue was up
14% driven by subscriber growth of 10% whilst data penetration within our
customer base remained above 46%.  Data usage grew by over 50% driving
non-voice revenue higher and supporting the ARPU.  Roaming revenue was in line
with last year as lower settlement rates with a major international roaming
counterparty were offset by higher traffic volumes.

 

Broadband revenue of US$29 million was 4% higher than the same period last
year due to a 4% increase in subscribers. The broadband ARPU also improved as
subscribers upgraded to higher speed packages including our 250Mbps fibre
offering.  We anticipate the introduction of a new fixed line data competitor
in the market and an application is currently under review by the regulator.

 

Fixed voice revenue of US$35 million was 8% lower than last year largely due
to reduced international revenue.

 

Enterprise, data and other revenue of US$33 million was 20% lower principally
due to the higher volume of contracts last year.

 

Gross margin at US$118 million was up 4% compared to the same period last year
reflecting the strong growth in mobile non-voice service revenue.

 

Operating costs of US$31 million were 3% higher than last year largely due to
higher marketing spend and inflationary pressure on property and staff costs.

 

EBITDA of US$87 million was 4% higher than in the same period last year.
 Adjusting for handset sales the underlying EBITDA margin was 44%.

 

Our proportionate ownership of Macau EBITDA for the six months ended 30
September 2012 was 51%.

Monaco & Islands (M&I)

 

·      EBITDA 2% higher at constant currency

·      Afinis disposal in August 2012

·      Roll out of fibre to the curb in the Seychelles

 

               6 months                          6 months   
                  ended        3 months 3 months    ended    3 months 3 months
                    30 Sep ended 30 Sep ended 30      30 Sep ended 30 ended 30
                   2012            2012 Jun 2012     2011    Sep 2011 Jun 2011
Subscribers
(000s)
Mobile^1            552             552      549      531         531      534
Broadband            61              61       58       55          55       53
Fixed               124             124      125      125         125      128
ARPU (US$)^2
Mobile             33.1            33.3     32.9     34.3        34.5     34.2
Broadband          60.9            61.2     60.6     62.7        63.3     62.1
Fixed              48.7            47.7     49.6     53.5        52.9     54.2
Revenue (US$m)      280                               300   
EBITDA (US$m)        94                                97   
Margin%                34%                               32%

 

   Active subscribers are defined as those having performed a
^1 revenue-generating event in the previous 60 days
^2 ARPU is average revenue per user per month, excluding equipment sales

 

Revenue at US$280 million was in line with the same period last year at
constant currency.  On a reported basis, revenue was 7% lower reflecting the
weakness in the Euro and Seychelles Rupee compared to the prior year.

 

Monaco revenue remained in line with the prior year at constant currency.
 Mobile service revenue was driven by non-voice services which increased by
29%, higher roaming revenues and a 7% growth in subscribers. There was also
growth in Broadband & TV revenue boosted by additional subscribers.  This was
balanced by a fall in enterprise revenue as transit traffic rates reduced.

 

Revenue in the Maldives was 3% lower.  In April 2012, damage caused to a
submarine cable by a third party resulted in lower mobile roaming revenue and
fixed international traffic after customers were compensated for the service
outage.

 

In Guernsey, revenue decreased by 4% at constant currency mainly due to the
loss of an enterprise contract.  We continue to seek new opportunities and are
looking to grow our market leading data centre business.  In Guernsey, we grew
our mobile subscriber base and service revenue increased by 4% compared to
prior year.  Both Jersey and the Isle of Man exhibited double digit revenue
growth following improved performance in mobile.

 

In the Seychelles we completed the rollout of a nationwide fibre network
supported by the country's first subsea cable network, the Seychelles East
Africa System.  We also saw a good performance in broadband and mobile revenue
with double digit growth on last year on a constant currency basis.

 

Gross margin at US$194 million increased by 1% at constant currency compared
to the same period last year, reflecting the revenue trend.  On a reported
basis it was 5% lower.

 

Operating costs were US$100 million, in line with last year at constant
currency and 7% better on a reported basis.  Lower Monaco staff costs
following headcount reductions in the Afinis business were offset by
additional cable repair costs incurred in the Maldives.

 

EBITDA at US$94 million was 2% higher than the prior period at constant
currency and 3% lower on a reported basis.

 

Operations in the Maldives, Monaco and Guernsey represented approximately 82%
of M&I revenue and approximately 87% of EBITDA in the first half.

 

Our proportionate ownership of Monaco & Islands EBITDA for the six months
ended 30 September 2012 was 65%.

 

Afinis disposal

Our subsidiary Monaco Telecom SAM completed the sale of its West African-based
enterprise business Afinis Communications to SkyVision Global Networks Limited
on 3 August 2012 for a total cash consideration of US$3 million.

    Other

Other includes management, royalty and branding fees, the costs of the
corporate centre, net UK defined benefit pension credit or charge and
intercompany eliminations.  EBITDA was US$12 million, US$9 million higher than
last year, following a pension credit related to the CWSF scheme and reduced
costs in the corporate centre.

 

    Joint ventures and associates

Our share of profit after tax from joint ventures was US$12 million, US$1
million lower than the prior period.

 

                                                         CWC share of profit
                                CWC share of revenue          after tax
                 Effective                                         Six months 
                                                        Six months   ended 30 
                 ownership as    Six months Six months    ended 30
                        at         ended 30   ended 30   September  September 
              30 September        September  September
                      2012             2012       2011        2012       2011 
                         %             US$m       US$m        US$m       US$m 
Trinidad &
Tobago (TSTT)             49%           110        111           6          6 
Afghanistan
(Roshan)                  37%            57         59           3          6 
Solomon
Telekom                   33%             4          7           3          2 
Others^1                                  -          7           -         (1)
Total                                   171        184          12         13 

 

^1 Includes results of Fintel and Telecom Vanuatu disposed of in the prior
   period and the new Seychelles cable associate

 

                                                               Fixed line
'000s           Mobile subscribers^1 Broadband subscribers     subscribers
                  As at 30  As at 30   As at 30   As at 30  As at 30  As at 30
                 September September  September  September September September
                      2012      2011       2012       2011      2012      2011
Trinidad &
Tobago (TSTT)          848       883        114         88       267       274
Afghanistan
(Roshan)             5,935     5,347          -          -         -         -
Solomon Telekom        174       147          1          1         8         8
Telecom Vanuatu          -        51          -          2         -         6
Total                6,957     6,428        115         91       275       288

 

   Active subscribers which are defined as those having performed a
^1 revenue-generating event in the previous 60 days

 

Roshan grew mobile subscribers by 11%, however ARPU came under pressure due to
the introduction of 3G services by competitors. This resulted in a US$3
million reduction in profit after tax attributable to CWC.

     

    Capital expenditure

    Capital expenditure was US$177 million, 16% higher than the same period
    last year, representing 12% of revenue.

     

    Our principal customer facing investments continue to be in 4G/HSPA+
    mobile data networks supporting smartphone sales in Panama, Macau, The
    Bahamas, Barbados, BVI and Cayman, selective pay TV investments, and
    improvements to our fixed broadband network.  The fixed broadband
    investment has included continuing our fibre roll outs in Macau and the
    Caribbean and completing the Next Generation Network in The Bahamas.  We
    have also continued with strategic investments in transmission capacity
    and cable systems to support both retail and carrier sales.  Finally, we
    continue to advance our billing and customer relationship management
    systems.

     

This is the second year of our investment in The Bahamas. We continue to focus
on providing an improved service to our customers and preparing for future
market competition.  In the Maldives we have entered the final year of
investment in a domestic cable network that will allow us to provide data
services to the population and tourist resorts.

 

    Depreciation and amortisation

Depreciation and amortisation at US$170 million was US$5 million lower than H1
2011/12 following the accelerated depreciation of legacy mobile assets in the
prior year.

Other Group items

     

Net other operating expense

The US$5 million net other operating expense incurred in the first half of the
year included losses on the sale of fixed assets.  In the prior period, the
US$7 million expense comprised stamp duty in connection with the purchase of a
51% stake in BTC in The Bahamas and US$3 million hurricane restoration costs
also in The Bahamas, partially offset by a gain on the retranslation of
sterling based pension funds.

 

    Exceptional items

Exceptional items in the period comprised charges for the Caribbean cost
initiative of US$26 million.  Our expectation that this programme will result
in between US$30 million and US$35 million of cash exceptional costs in
2012/13 remains unchanged.  The prior period charge was associated with
redundancy and restructuring programmes in The Bahamas and Panama.

 

Net finance expense

The US$77 million net finance expense for the Group consists of finance income
of US$14 million (US$5 million in H1 2011/12) and finance expense of US$91
million (US$78 million in H1 2011/12).  Compared to the prior period the net
interest expense is higher primarily due to increased debt.

 

Other non-operating expense

The US$15 million other non-operating expense charge reflected the loss on the
disposal of Afinis.

 

Income tax expense

The income tax charge of US$44 million (US$37 million for H1 2011/12) is in
respect of overseas taxes.  This charge represents an effective tax rate of
24%.

 

Group cash flow ^ 

                                                           2012/13   2011/12
US$m                                                           H1    H2    H1 
EBITDA^1                                                      445   458   443 
Capital expenditure^2                                        (177) (230) (153)
Operating cash flow before exceptionals                       268   228   290 
Movement in working capital and other provisions              (50)   38   (44)
Net investment income^3                                         6     7     6 
Underlying free cash flow                                     224   273   252 
Fixed charges
Income taxes paid^4                                           (77)  (26)  (64)
Interest paid^5                                               (50)  (59)  (66)
Dividends and shareholder loans to non-controlling
interests^6                                                  (104)  (63) (120)
Underlying equity free cash flow                               (7)  125     2 
Dividends paid to shareholders                               (133)  (68) (136)
Net cash flow before non-recurring items and exceptionals    (140)   57  (134)
Non-recurring items and exceptionals
Cash exceptionals                                             (11)  (32)  (37)
Coupon for sterling unsecured bond redeemed August 2012       (27)  n/a   n/a 
Panama tax brought forward                                    (12)  n/a   n/a 
Share buyback                                                   -     -   (70)
LTIP                                                            -    (3)   (6)
Acquisitions and disposals^6                                   (1)   22  (144)
Pension funding                                                 -    (2)    - 
Net cash flow after non-recurring items and exceptionals     (191)   42  (391)
Net proceeds from borrowings                                  147   (44)  343 
Net cash flow                                                 (44)   (2)  (48)

 

^1 Earnings before interest, tax, depreciation and amortisation, net other
   operating and non-operating income/(expense) and exceptional items
^2 Balance sheet capital expenditure, excluding movement of capex accruals,
   was US$135 million and US$160 million in H1 2012/13 and H1 2011/12
   respectively
^3 Includes dividends received from joint ventures of US$1 million in H1
   2012/13 (US$2 million in H1 2011/12)
^4 Excludes US$12 million impact on timing of payments following change in
   Panama tax legislation
^5 Excludes US$27 million coupon in H1 2012/13 on sterling unsecured bond of
   £200 million redeemed in August 2012
^6 Monaco Telecom dividend paid to minority interest of US$7 million in H1
   2012/13 (US$8 million in H1 2011/12) has been reallocated to dividends paid
   to non controlling interests, but for IFRS purposes is included in
   acquisitions and disposals

 

The Group generated operating cash flow before exceptional items of US$268
million in the six months ended 30 September 2012, 8% lower than the same
period last year following the Group's decision to invest heavily in its
mobile data networks.  As a result US$177 million was invested in capital
expenditure compared to $153 million in the same period last year in part
reflecting the timing differences between commitment and expenditure.  The
outflow from movements in working capital and provisions largely reflects the
cyclical nature of our payments profile.

 

Investment income of US$6 million included dividends received from joint
ventures of US$1 million, US$3 million of interest received on cash balances
and the proceeds on disposal of Cable & Wireless Worldwide plc shares.

 

Fixed charges

As in the prior period our fixed charges are more weighted to the first half
of the year.  We paid US$77 million relating to income tax in the first half
of 2012/13, excluding US$12 million of tax brought forward due to a change in
Panama tax legislation (see non-recurring items and exceptionals below).
 Interest of US$50 million was paid on our external borrowings, excluding
US$27 million of increased borrowing costs arising from the timing of
refinancing our 2012 sterling unsecured bond.  We paid dividends and loans to
non-controlling interests of US$104 million in the period.  This was US$16
million lower than last year due to timing differences in upstream dividend
payments.

 

Dividends to our shareholders were in line with the prior year as the final
dividend which was paid in this period was based on US8 cents per share for
the financial year 2011/12.

 

Non-recurring items and exceptionals

The net cash outflow included US$11 million for exceptional items which
related to restructuring costs in the Caribbean, where our cost initiative has
progressed faster than anticipated.  We also incurred additional borrowing
costs of US$27 million due to the timing of refinancing our 2012 sterling
unsecured bond.  A recent tax legislation change in Panama has led to the
timing of payments being brought forward.  As a result there were US$12
million of additional tax payments in the first half and we anticipate this
change will also result in an increased outflow in the second half.

Group cash and debt

                    As at 30 September 2012          As at 31 March 2012
                 Subsidiaries  Central   Group  Subsidiaries  Central   Group 
                         US$m     US$m    US$m          US$m     US$m    US$m 
Cash and cash
equivalents               253       13     266           265       47     312 
Sterling
unsecured bonds
repayable in
2012                        -        -       -             -     (317)   (317)
Sterling
unsecured bonds
repayable in
2019                        -     (238)   (238)            -     (234)   (234)
US$500 million
secured bonds
due 2017                    -     (493)   (493)            -     (492)   (492)
US$400 million
secured bonds
due 2020                    -     (390)   (390)            -     (390)   (390)
US$600 million
Revolving Credit
Facility (RCF)              -     (330)   (330)            -        -       - 
Other central               -      (48)    (48)            -        -       - 
Other regional
debt facilities          (355)       -    (355)         (274)       -    (274)
Total debt               (355)  (1,499) (1,854)         (274)  (1,433) (1,707)
Total net debt           (102)  (1,486) (1,588)           (9)  (1,386) (1,395)

 

Net debt reconciliation

                                                    Coupon
                          Dividends                   for 
        As at Underlying        to                sterling   Panama 
          31      equity        CWC                  bond        tax          As at 30 
       March   free cash     share          Cash       due  brought          September 
US$m    2012       flow^1  holders  exceptionals     2012   forward  Other^2      2012 
Total
net   (1,395)         (7)     (133)          (11)     (27)      (12)     (3)    (1,588)
debt

 

^1 Before one-offs, exceptionals and financing
^2 Other includes: acquisitions and disposals outflow of US$1 million,
   positive exchange movements of US$3 million, and amortised borrowing costs
   of US$5 million

 

During the period the sterling unsecured bonds repayable in August 2012 were
redeemed at par using cash balances and drawings on the US$600 million
revolving credit facility.  The revolving credit facility has a margin of
2.50% over LIBOR and a maturity date of October 2016.  As at 30 September
2012, US$330 million of this facility was drawn.

 

Pensions

As at 30 September 2012, the defined benefit section of the Cable & Wireless
Superannuation Fund (CWSF) had an IAS 19 deficit of £84 million, compared to a
deficit of £81 million as at 31 March 2012.

 

Cash contributions have been agreed with the trustees from 2014 to 2016 in
order to eliminate the actuarial deficit.  These payments are subject to the
outcome of the next actuarial valuation as at March 2013.  This future deficit
funding constitutes a minimum funding agreement and, in accordance with
accounting standards, we are required to account for this within our IAS 19
deficit.  The increase in the IAS 19 deficit in the period is mainly due to a
fall in index-linked gilt yields resulting in an increase to this minimum
funding commitment.  The IAS 19 deficit recorded at 30 September 2012
represents the present value of the maximum amount committed under the minimum
funding agreement.

 

The fund assets at 30 September 2012 were approximately invested 74% in the
bulk annuity policy, 19% in equities, and 7% in bonds, property, swaps and
cash.

 

There are other unfunded pension liabilities in the UK of £27 million (£26
million at 31 March 2012).  The Group holds investments in gilts of £22m to
partially back the UK unfunded pension liabilities.  Other schemes in Cable &
Wireless Communications have a net IAS 19 surplus of US$14 million (US$22
million surplus at 31 March 2012).

 

  Dividend

We are declaring an interim dividend of US1.33 cents per share.

 

The interim dividend of US1.33 cents per share will be paid on 11 January 2013
to ordinary shareholders on the register at the close of business on 16
November 2012.  Subject to financial and trading performance in the second
half of 2012/13, we expect to recommend a final dividend of US2.67 cents per
share, resulting in a full year dividend of US4 cents per share.

 

A currency option and the dividend reinvestment plan will be offered in
respect of the interim dividend.  The default currency for payment is GBP
sterling.  Shareholders wishing to receive their dividend in US dollars or
wishing to participate in the dividend reinvestment plan should make an
election using CREST Input Message or return a completed Currency Mandate Form
or Dividend Reinvestment Plan Mandate Form to: Equiniti Ltd, Aspect House,
Spencer Road, Lancing, West Sussex, BN99 6DA by 11 December 2012.  Copies of
the mandate forms are available from Equiniti Ltd.  UK callers: 0871 384 2104;
overseas callers: +44 (0)121 415 7052 or from our website www.cwc.com.

 

The sterling dividend payment amount per share will be announced on 17
December 2012, and will be based on the prevailing GBP sterling to US dollar
exchange rate at 2pm GMT on that date.     

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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