Mercury Communications Ltd is growing its residential customer base at a rate of 15,000 a month, 5,000 of which are coming in on the back of cable television sales, said chief executive Mike Harris, speaking at Cable & Wireless Plc’s annual results meeting in London yesterday. A total 130,000 customers were pulled in in 1992, […]
Mercury Communications Ltd is growing its residential customer base at a rate of 15,000 a month, 5,000 of which are coming in on the back of cable television sales, said chief executive Mike Harris, speaking at Cable & Wireless Plc’s annual results meeting in London yesterday. A total 130,000 customers were pulled in in 1992, bringing the total number of customers to 250,000 at the year end. Mercury hopes that, largely through relationships with various cable television companies, it will achieve 2m subscribers by the middle of the decade. One agreement Mercury has is with the TCI-US West joint venture, which is claimed to have access, by cable, to some 2.9m homes. Mercury also has an agreement with Videotron in the UK, for access to 1.2m homes in Southampton and London, and with Nynex, which has access to a further 250,000 homes in Portsmouth. On the recent Office of Telecommunications ruling, (CI No 1,939), Harris said he expects the impact of the new pricing proposals to be neutral in the short to medium term, while the new principles of interconnect are favourable to Mercury. Mercury reported trading profits up 34% at UKP155m on revenues up 30% at UKP915m. Cable & Wireless, meanwhile, turned in trading profits up 27% at UKP727m on revenues up 22% at UKP3,176m. Return on net assets was up at 25% from 21%, capital spend as a percentage of revenues was down to 27% from 32%, and net gearing was 26% at the year end. Pre-tax profits rose a modest 6% to UKP644m, after UKP70m exceptional charges taken above the line this time, up from just UKP9m last time. These comprised UKP37m group rationalisation costs this time, UKP15m outlay on Mercury PCN, as well as UKP18m to reflect the fall in the value of the Jamaican dollar (from $Ja15 to the pound, to $Ja40) following the lifting of exchange controls in September. The fall of the Jamaican dollar, which has now apparently stabilised, has had a major effect on the result of Cable’s third largest business, Telecommunications of Jamaica (of which Cable & Wireless owns 79%), when translated into sterling. Cable has now been refocused to concentrate on three core business areas: premium and business services; basic telecommunications and mobile communications. Majority-owned Hong Kong Telecommunications’ trading profit was up 28% to UKP475m on sales up 20% at UKP1,367m. Its international telephone traffic rose by 15% while traffic between Hong Kong and South China increased by 35%. The full digitalisation of the network is nearly complete. Guangdong is planning to double the number of telephone lines in use in the next three years, and HongKong Telecom is poised to reap the benefits. With Hong Kong as the hub for a surging South China, Cable & Wireless chairman Lord Young expresses confidence about the firm’s prospects in the region. Negotiations with the Hong Kong government have come to a conclusion, the new pricing regime to ensure that the communications environment in Hong Kong will continue to compete with any other part of the Pacific Rim; at the same time, the govenment has allowed Hong Kong Telecom’s current investment programme to continue. Investment in Telecommunications of Jamaica, meanwhile, has brought up the number of telephone lines from 90,000 to 130,000 during the last two years. And, in addition to the improvement in Cable’s shareholding in Barbados, the group has extended its Cayman Islands franchise for a further 20 years. The Global Digital Highway, providing a broad band fibre optic network linking Cable & Wireless customers in the main financial and commercial centres of Europe, North America and the Pacific Rim, is now in operation, taking the group a step nearer its goal of conquering the world (or the bits that are worth conquering). Optus Pty Ltd in Australia, in which Cable & Wireless has a 24.5% stake, is trading at a loss, though the group feels that this will be contained within the next two to three years – regulatory conditions Down Under are described as favourable, with equal access from the start of operations. The Optus consortium has won t
he opportunity to establish a second national network in Australia.
As well as long distance and international, Optus also has satellite and mobile licences. During the year, Cable & Wireless was invited by Intertelecom, Russia’s long distance and international carrier, to undertake a feasibility study for a 50-50 partnership to develop long-distance and international telecommunications services in certain business areas. The group has also joined Sovam Teleport, the Russian-US data networking company serving the whole of the former Soviet Union. Mercury’s personal communications mobile phone venture, Mercury Personal Communications, owned 50% by Cable & Wireless and now linked up with Unitel’s PCN operation, expects to have its Personal Communications Network up and working within the M25 London ring by May 1993. Once it has been proved, and as demand dictates, this will be expanded in stages around the country. Lord Young reckons Cable & Wireless now has its management team for the 1990s – in addition to the appointment of Mike Harris as chief executive of Mercury in February, the group in April took on British Petroleum Plc managing director James Ross as & Wireless group chief executive.