C&W profits from internet move

Wallace: "Results demonstrate healthy growth and exceptionally strong finances"

The UK's Cable & Wireless posted first-half earnings at the top end of analyst expectations as it continued moves to reposition itself as an internet services group.

Investors responded positively to the results announcement, with the group's shares rising 39 pence or 4.59% to 889p by 1050 GMT.

The price movement followed a day of gains on Tuesday when investor sentiment in telecoms issues was boosted by strong results from Vodafone, the world's largest mobile phone operator.

C&W reported first-half earnings before interest, tax, depreciation and amortisation of £1.1bn, down from £1.3bn in the corresponding period of last year because of a disposals programme.

Group revenue declined slightly, reflecting the sale of C&W's Communications ConsumerCo and HKT units in the period. Revenue at the Global unit - comprising C&W's wholly owned US, Europe and Japan operations - grew 20%.

IP provider

"These results demonstrate healthy growth and exceptionally strong finances," chief executive Graham Wallace said.

"In the last six months we have put in place key components towards achieving our strategic objective - to be the leading global provider of internet protocol (IP) solutions to business customers.

Mr Wallace said C&W had recently launched a major expansion of its IP infrastructure network in Japan which would complement the upgrading of its US network.

Capital expenditure increased 12% in the period.

Mr Wallace said he expected revenue in C&W's target market to grow 15-20% annually overall in the next few years.

"We are developing solutions and sales channels to capture this growth and we are transforming our infrastructure and operations to improve profitability, through, for example, a major programme to e-enable a number of our activities."

Optus sale

C&W's transformation from a telecoms company to an internet services group has included the purchase of a number of small internet service providers in Europe and the sale of its Hong Kong telecoms operation.

Mr Wallace said the company was also planning to sell the mobile and consumer divisions of Optus, Australia's number two telecoms provider in which it holds a 52.5% stake.

It would retain the business and data divisions.

Any sale would fund acquisitions of application service providers - companies that provide internet access or rent software over the internet, Mr Wallace said.

Likely purchasers of Optus include New Zealand's Telecom and Japan's mobile phone giant NTT DoCoMo, analysts said.

Vodafone might also be among those interested in Optus's mobile assets only, they said.

C&W declared an interim dividend of 4.95p a share, up from 4.5p a year ago.