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News : Local Last Updated: Oct 31st, 2016 - 07:22:36


Cable & Wireless Jamaica on sale
By Marston Gordon
Oct 31, 2016, 07:11

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Just over a year ago, November 18, 2015 to be exact, CWJ stock price hit an intraday high of $2.00 after it was reported two days earlier by Bloomberg that Liberty Global was to acquire Cable & Wireless Communications PLC.
Local investors incorrectly presumed that the acquirer would tender for CWJ without understanding that the purchase of the parent company would transfer ownership of the subsidiary. Investors were however not totally irrational as a month earlier, October 7, 2015, Desnoes & Geddes shareholders were notified of an offer from Heineken at a premium of 286% above the prior daysí closing stock price.

CWJ has faltered over the last few years because it failed to transition to wireless technology and did not act proactively when the telecommunication market was opened to competition.
In the recent past investors have been frustrated by the elusive return of the company to profitability and although encouraged by the small profit for year ended 2016 the hope was shattered with the release of the first quarter 2017 report and with it the stock price.

The sell-off is unwarranted; a close examination of the report points to a brighter future with continuous growth in revenue, particularly from data. Operating profit, adjusted for the accelerated depreciation charge is up sharply over the comparative period and net loss although higher is largely a result of finance expense. The company is generating significantly more operating cash, 183% over the same period, and though it is not paying down the debt due to its parent nor serving the interest charge thereon it has used about 30% of the cash towards asset acquisition.

The second quarter results are expected to be better than that of the first quarter.

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Source: Jamaica Stock Exchange

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