CABLE & WIRELESS PLC

Cable & Wireless plc

Financial Analysis - Cable & Wireless plc

Introduction

Cable & Wireless is a London based communications company which offers international telecommunications and television services across United Kingdom. This company operates through four regional units being the Caribbean, Panama, Macau and Monaco & Islands. Through these business units Cable & Wireless provides mobile, fixed line and broadband. Cable & Wireless also provides services to enterprises and government. Beside this they offer TV service, which it bundles with broadband and fixed line services, providing a triple play offering to customers. In the Caribbean, Co. operates under the brand LIME - Landline, Internet, Mobile, and Entertainment which reflects the services Co. provides to people, governments and businesses across the region (www.cw.com).

Industry Outlook

Number of cable TV subscriptions: There has been a large shift of viewers from network to cable TV largely due to an increased number and variety of channels and because some sports telecasts are only available on cable and satellite services.

Per capita disposable income: Trends in household income influence the switch from a basic cable system to more expensive digital cable systems, including an associated value-added service, which leads to higher revenue for operators.

Total UK advertising expenditure: The industry generates 35.4% of its revenue from selling advertising spots that air on its networks. Advertising expenditure depends on corporate profit and consumer spending.

Time spent on leisure and sports: While the industry serves a broad audience, leisure time is a major limiting factor in consumers' ability to spend time watching TV. People are less likely to spend on cable TV subscriptions if they do not have time watch TV.

Per capita disposable income: The industry is sensitive to changes in economic activity. As households review their expenditures, especially during any economic downturn, this factor particularly affects the industry in terms of holding on to existing subscribers and attracting new ones.

Number of broadband connections: In addition to cable TV service, cable providers offer broadband internet connections in bundled packages. Increasing consumer demand for broadband internet connections improves the likelihood of cable companies selling more expensive subscription plans (360.datamonitor.com).

Number of households: A relatively stable percentage of households subscribe to cable video services, suggesting that a crucial driver of the cable provision industry is the total number of households.

Consumer sentiment index: Changes in consumer sentiment directly affect discretionary expenditure, particularly on high-priced, value-added services.

Important Financial Trends

Profitability Ratios

The profitability trend of the Cable & Wireless plc is steadily reducing in 2011 to the 2010 which state that Cable & Wireless plc was outperforming in 2010 but due to reduction in net income while sales increased in 2011 comparing to 2010 with 6% [(146681-155775/155775]. ROA of Cable & Wireless in 2011 is 7.92 while previously it was showing value of 5.97. Hence, company is sufficiently managing their assets in order to generate profit.

As far as ROI is concern, Cable & Wireless has also enhanced their investment due to increase in their sales in ...