Cable & Wireless £3.6bn demerger 'back on cards'

Published on Saturday 31 October 2009 13:55

TELECOMS company Cable & Wireless is said to be working on plans to offload its Cable & Wireless International business in a £3.6 billion demerger that it postponed last year.

An announcement is expected this week to coincide with interim figures.

Plans to split Cable & Wireless International – which largely serves domestic customers in the Caribbean – from Cable & Wireless Worldwide, its British and European fixed-line operations servicing businesses, were put on hold amid the financial crisis last year, but improving market conditions have revived the plan.

Worldwide is now cashflow positive, giving hope it can stand alone, while International is said to have no shortage of suitors. Its management team are on a lucrative long-term incentive plan that could be boosted by any deal.

Jonathan Groocock, of Investec, said a demerger was back on the cards.

The speculation has helped to lift the share price which has lagged the recent stock market rally.

Investors are now hoping that a split – seen as part of the company's "valuation realisation" initiative – will lead to a special dividend payment.

A fall in tourists visiting the Caribbean contributed to what are expected to be weak results on Thursday.

Investors at its AGM in July criticised changes to the executive pay scheme, with a quarter voting against the remuneration report.

The group, which last year swallowed Glasgow-based telco Thus, unveiled plans in May to extend its bonus scheme by an extra year due to the delay to its demerger plans.