“We’re not anticipating a recovery in the second half. We’re not even planning for one next year,” Rice said. *Photo credit: horizonwirelessonline.com
PORT OF SPAIN, Trinidad, CMC – The British telecommunications company, Cable and Wireless, is reporting a decline in revenue from its operations in the Caribbean and analysts warn that the second half of the year may even be worse than the first six months.
Cable and Wireless said that demand for its services fell as fewer tourists travelled to the region, hitting profits at the company that operates fixed-line and mobile operations in the Caribbean Islands, Macau, Panama and the Channel Islands.
Chief executive officer, Tony Rice, said the decline in visitor numbers hit businesses hard and a quarter of a million migrant workers left the Caribbean, of which a large number were pre-pay customers.
The company cut full-year earnings guidance for the division from US$935 million to a range of US$880-US$900 million.
“We’re not anticipating a recovery in the second half. We’re not even planning for one next year,” Rice said.
But Jonathan Groocock, an analyst at the UK-based firm Investec, said that losses at the Caribbean unit actually sped up in the first half, suggesting the second half “may well be worse”.
Cable and Wireless once enjoyed a monopoly status in the region but has come under severe competition from the Irish-based DIGICEL after Caribbean countries liberalized their telecommunications sectors.
Rice said that the British telecom giant intends to split its operations so as to increase its profit potentials.
The plans for the new venture are likely to be announced at the end of the month.
Rice said the first phase of the ‘One Caribbean’ model being created across LIME’s 13 markets has been finalised, and that the next phase would focus on “protecting market share across the board”.
“The board believes that a demerger is the right structure to drive further growth and value for shareholders by enabling both businesses to pursue their strategies independently, and it is keen to push ahead as quickly as possible,” said the company’s Chairman Richard Lapthorne, adding the restructuring was taking place now because of “emerging signs of more settled conditions in financial markets.”
