Not so sunny outlook: CWC issues Caribbean warning

Cable & Wireless Communications shocked investors yesterday by warning that it expected a further downturn in earnings from its Caribbean arm.

With economic conditions hitting usage in the 13 countries making up the region, the firm said underlying earnings were likely to slide further from the $229 million (142m) recorded in the year to March, which itself represented a 15 per cent fall. Shares in the group fell by almost 12 per cent.

Call revenues in the region fell by 9 per cent, with both lower usage and higher numbers of people leaving, especially in Jamaica, where the country's poor economic situation is adding to the problems. CWC - formed following a demerger last year from C&W's corporate telecoms arm - now expects its underlying earnings from the Caribbean in 2011-12 to be in the range of $180m to $210m, down by a third in two years - at the bottom of the range.

Tony Rice, chief executive of the London-based group, which also has operations in Macau, Panama and Monaco, said the Caribbean had been more difficult than expected since the demerger and it continued to face weak or declining economies in the region. Profits overall rose by 21 per cent to $462m last year, but on an underlying basis the performance was flat as revenues from the Caribbean business declined by 3 per cent to $850m.

A better performance elsewhere partially offset this, with Macau doing well as mobile phone demand is booming as smartphone usage takes off. Panama also progressed, as did the operations in Monaco and the Maldives.