C&W to hand back £250m

Published on 11/11/2004 00:59

TELECOMS giant Cable & Wireless is to return up to £250 million to investors after it posted its first net profit in more than three years.

The announcement came as the company unveiled a further restructuring programme aimed at saving 50m in annual costs by March 2006 by shedding 600 jobs in the UK and continental Europe and closing its London head office.

The firm said chief executive Francesco Caio would assume direct control of its main UK business and also announced the departures of chief operating officer Kevin Loosemore and UK business chief Royston Hoggarth.

Shares and bonds in the 132-year-old company, once a provider of telecoms services to the British empire, reacted positively to the news, racing to five-month highs. The shares closed 7p, or 6.4 per cent, up at 116.5p

C&W has already cut 1,500 jobs since June last year when it embarked on a cost-cutting drive in the UK. It has also shed many of its overseas assets.

"They’re doing exactly the right thing. The cost-cutting on the UK side is entirely necessary and I’m very pleased that Caio is taking an active role there," said Jim Wright, fund manager at shareholder British Steel Pension Fund.

Nigel Cobby, managing director for European Equities at JP Morgan, added: "Many people think that C&W has been poorly run, is overly bureaucratic and cost-heavy and they welcome this."

C&W’s chairman, Richard Lapthorne, said that the share buybacks were being mainly funded by disposals. The company’s existing cash pile of 1.38 billion would be used only for acquisitions.

"It’s quite clear that we will be retaining cash to continue to develop our strategy. We don’t need the cash to cover costs; our costs are going to be covered by sales," he said.