Maintaining operational efficiencies
We continue to drive operating cost
efficiencies across the business.
However, given the anticipated nonrecurrence
of some one-off benefits in
2010/11 and the cost inflation we are
experiencing, combined with the
operating expenditure investment we
intend to make to exploit the cloud
opportunities, we currently expect
operating expenditure in 2011/12 to
show a year-on-year increase in the
order of £30 million.
Key features:
- Challenging market, particularly in the public sector and mid-market;
- Increasing potential to increase our public sector market share; and
- Forecasting improvements made to improve visibility and predictability of our business.
Driving cash flow growth
Given its importance to shareholder
return, we remain particularly focused on
cash flow growth and we expect trading
cash flow in 2011/12 to be around
£50 million higher than 2010/11. This
is driven primarily by a year-on-year
decrease in cash exceptional items
and substantially reduced working
capital outflow.
Key features:
- Free cash flow positive for the first time at £61 million;
- Continued control around capital expenditure; and
- Trading cash flow increased by 63%.
Supporting financial transparency
We enhanced our financial disclosure in
2010/11 and continue to look for ways to
simplify our business in order to allow
investors to understand and compare
our business more easily with peer
group companies.
Key features:
- Splitting our financial performance by product and channel;
- Given more clarity on our working capital movements;
- More transparency around the use of finance leases; and
- Detailed analysis of free cash flow.
Managing the decline in voice and legacy
The Telecoms industry grew out of the
traditional need to carry voice from point
to point. This has been in decline for a
number of years as phone call volumes
decline and although forecasting the
precise year-on-year decline in absolute
margins is difficult, we expect this to be in
excess of 10% in the future. Traditional
voice and legacy products also generate
increasingly lower percentage margins.
The world began to move to data carried
over an Internet Protocol (IP) based
network and we have sought to differentiate
ourselves through our service and strategic
product propositions as customers make
this shift from voice to IP and data.
Key Features:
- Increase in speed of decline in traditional voice; and
- International and wholesale voice traffic reductions and management of loss margin.
Maximising the opportunities from our strategic product set
We expect growth in strategic products
to more than offset the decline in voice
and legacy products. We continue to
experience increased demand in bandwidth
and migration from legacy voice to voice
over IP. However, there is competitive
pressure in the market for pure data
connectivity and we are seeing price erosion
on a number of contract re-signs. We continue
to invest in our sales teams, reorganising
our enterprise business to better address
specific industry sectors, allowing us to
become more aligned with our customers with products that meet their requirements.
Key Features:
- Continued notable contract wins in our strategic product sets; and
- Increasing appetite for solutions based on a suite of products and capabilities, including hosted services such as Fixed Mobile Convergence (FMC) and Managed Video Conferencing enabling our customers to save costs.
Differentiation through communications integration service proposition
We continue to review developments in
the markets in which the Company operates
and to consider how the business can
best position itself strategically. Customer
appetite for integrated hosting solutions,
i.e. cloud solutions, is a growing trend and
we believe this represents a significant
growth opportunity for Cable&Wireless
Worldwide. Customers are demanding
that their supplier can offer a full end-toend
communications integration suite.
Key Features:
- Flexible cloud computing offer successfully launched;
- Increasing demand for provision of services in a virtualised environment
- Partnership with IBM to develop the UK Smart Energy Cloud;
- Strengthen our hosting capacity further by investing in incremental capital and operating expenditure; and
- Addition of more application services using technology partners.
Case Study: Vertex
"Cable&Wireless Worldwide clearly demonstrated that it
has the capability to take over a major component of Vertex's
operations, and has the commercial flexibility and
willingness to take on risk and invest in their relationship
with Vertex."
Andrew Chamberlain, CTO, Vertex
Vertex is a leading global Customer Management Outsourcing
business with clients in the private and public sectors.
Under a £40 million, five year private cloud contract, Cable&Wireless
Worldwide is providing a fully-managed Infrastructure as a Service
(IaaS) solution for Vertex to host its IT infrastructure, in the UK and
India, in a private cloud within Cable&Wireless Worldwide's secure
data centre environments. Vertex also has global access to all its
information via Cable&Wireless Worldwide's high-speed nextgeneration
network (NGN).
Vertex's IT infrastructure was previously a mixture of several
platforms. Cable&Wireless Worldwide is helping Vertex to simplify
their existing IT infrastructure, which will consolidate their expanding
corporate and customer IT infrastructure, consisting of more than
1,600 operating systems and 600 physical servers, and will
accommodate 200 terabytes (TBs) of storage space.
"This programme will dramatically transform our technological
capability to continue delivering world-class service levels."
Andrew Chamberlain, CTO, Vertex
Case study: DFID
"Cable&Wireless Worldwide provides a fast, reliable and
secure network that ensures we can focus on delivering aid
more effectively into some of the poorest and most remote
regions in the world. We are seeing substantial savings in
our telecoms budget. This is good news for us and great
news for the taxpayer."
Peter Sweeney, Head of Operations, Department for International Development (DFID)
DFID works to get rid of extreme poverty and manages Britain's aid to
the world's poorest countries. It has offices in around 40 developing
countries and provides aid to approximately 90 countries. In order to
reduce its telecommunications budget and connect all its sites on
one network, it turned to Cable&Wireless Worldwide.
Under a five and a half year, £10.3 million contract on its global
telecoms framework, Cable&Wireless Worldwide provides fast and
reliable connectivity to all of DFID's sites across the globe, allowing
DFID users to seamlessly communicate with one another.
The advanced IP services, which include IP voice, ensure better value for
money through the reuse of existing Cable&Wireless Worldwide shared
services, enabling DFID to improve operational efficiencies and increase
inter-departmental collaboration across the world.
Case study: Next
Cable&Wireless Worldwide continues to lead high street
communications with a five year contract that connects
32 distribution sites and offices in the UK and Hong
Kong for leading retailer, Next plc.
Cable&Wireless Worldwide's single, secure and high-speed nextgeneration
network underpins all of Next's critical communications
including taking orders and dispatching and receiving goods into
warehouses. The advanced network provides Next with significantly
more capacity to work with much higher volumes of goods than it
was previously able to process.
The increased capacity and flexibility also enables more customers
to place orders on Next's website; this will be particularly beneficial
during peak trading periods. Next is well positioned to ensure its
festive online shoppers enjoy the same high standards of service
as they would instore.
Next comments: "We needed a highly resilient network which would
support our current needs and allow for future growth and new
technologies. Additionally, the Application Performance Management
service gives us more control over our network traffic than ever
before, helping us deliver even better service to our stores and
online customers."
Our network & global reach
Cable&Wireless Worldwide owns the UK's
biggest fibre network dedicated to
business users of telecommunications.
Internationally, we have a cable network
spanning more than 425,000km in length. It
reaches across the Atlantic Ocean, through
Europe and on to India, throughout Asia and
beyond. In conjunction with satellites, we
connect every continent and more than 150
countries, either directly or indirectly
through our business partners.
Our Next Generation Network (NGN) spans
the entire globe. It is specially designed to
serve customers, who need a best-of-breed
network solution, which is high speed and
able to run the mission critical applications
and services of large organisations.
Our IP-based Multi-Service Platform
operates at the core of our NGN, offering a
single environment on which voice and data
applications can be converged to drive
business efficiencies. It is uniquely
designed with inbuilt resilience.
Our network is integral to meeting the
increasing demands for high speed data
access. High speed connection to mobile,
tablet, video conferencing, etc. is only
made possible by the networks and
technologies that underpin those devices,
and it is only cable that can deliver the
speeds that are required.
BE THE CUSTOMER
We are all customers. We all know how we want to be treated and what it is that
winds us up. Colleagues in our business are encouraged to look at everything
through the eyes of the customer. We do this because we have an obsession for
customer service. It also helps to drive innovation and insight on what more we
can do to help our customers succeed.
SAY IT LIKE IT IS
We know we can get more from an open exchange of views than we can from
meaningless platitudes. Above all though, we recognise the power of listening –
to our customers, shareholders and colleagues.
ONE TEAM
We believe in partnerships and team working, ranging from cross-functional
teams, working closely across varied geographies. We also partner with our
customers and suppliers and constantly strive to live and breathe their business,
because we know our success is tied in with theirs.
WE DELIVER
Customers want a telecoms partner that's reliable – that they can trust to deliver
results, every time and all the time. Our colleagues are driven by this, that's why
we measure and reward them on what and how they deliver.
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