C&W said its profit before tax and exceptional items was £878m, compared to analysts' expectations of £750 to £780m.

The company will "attack" the European telecoms market, but it will be solo move following the failure of a proposed alliance with Telecom Italia Spa, chief executive Richard Brown said.

Plans for its European expansion would announced next week, he said.

C&W is Britain's second-largest telecoms company behind BT and issued its results on Wednesday following Tuesday's release of results for its two major subsidiary businesses, Cable and Wireless Communications (CWC) and Hong Kong Telecommunications.

Mr Brown said in the results statement: "Cable and Wireless has delivered encouraging growth in underlying revenues and profits. These figures represent a sturdy performance, achieved in a period of substantial investment, strong sterling and difficult economic conditions in Asia."

The company has moved to consolidate its worldwide assets, selling smaller businesses over which it has little control.

The multi-national said it had managed to shift its emphasis away from crisis-hit Hong Kong with UK revenues rising from 20% to 64% of overall revenue. Business revenue outside Hong Kong is now 70% of revenue, the company said.

Exceptionals items worth £244m in the six months included a £198m profit on the disposal in a South African business.

At 916 GMT, C&W shares were 16 pence higher at 664 pence. CWC profit lift

CWC on Tuesday reported a 12% increase in underlying pre-tax profits.

The improvement was helped by robust revenue growth in the company's four business units.

CWC Cable TV subscriptions rose 1%

CWC, which is 54%-owned by Cable and Wireless, said profit before tax, exceptional items and millennium costs rose to £73m ($121m) for the six months to September from £65m in the same period last year.

Group revenue jumped 14% to £1.26bn.

The results were better than the £65m that analysts had predicted. The group's shares jumped 2.6% in response.

Strategy pays off

Chief executive Graham Wallace said: "Our strategy of investing for growth in data, video, Internet and advanced services is paying off.

Revenue increased in all four of the company's business units, reversing the previous declines.

It does not expect to pay any dividends for another two to three years.

CWC's network was available to 4.3m households by the end of September, up from 3.8m a year earlier.

CWC was formed in 1997 after a four-way merger and is currently integrating its operations as it prepares to launch a digital, interactive television service next year.