Cable & Wireless Plc saw revenue slump 9% to 798m pounds ($1.4bn) in its first quarter to June 30 as the company was battered by brutal price competition in its UK home market and the slide of currencies in the Caribbean, where governments are opening up markets once dominated by the company to competition.
In a trading statement, the company said that in the UK first-quarter revenue was down 4% sequentially and flat compared with a year earlier. Cost reductions taken in the second half of last year will help to compensate for the pricing pressure, but the company plans further cost savings in the second half of this year.
Caribbean revenue was 3% down on the year, and fell 7% sequentially, reflecting the impact of competition. Europe was a disaster for the company with revenue down 33% at constant currencies, while in Japan and Asia it saw a 20% slump in sales.
The set-back is a particular disappointment for a company that shed its loss-making internet operations in the US to concentrate on its core business in the UK, only to face increased competition, particularly from incumbent BT Group Plc.
The company’s only compensation is that it is sitting on a $1.4bn pound ($2.6bn) cash pile which puts it in a good position to acquire weaker players without the resources to survive a period of low prices.