CABLE & WIRELESS OPTUS DELIVERS PROFIT OF $24 MILLION

The result was driven by a major improvement in the company's mobile business, strong revenue growth in business network services and a significant increase in its local telephony base.

Highlights of the first half results include:

7 Continued double-digit revenue growth

7 Strong cost containment

7 36 per cent rise in EBITDA (Earnings before interest, tax, depreciation and amortisation) to $468 million

7 EBIT up 205 per cent

7 10 per cent revenue growth in mobile services revenue

7 29 per cent revenue growth for Business Network Services

7 Increase in local telephony base to more than 200,000 lines, and

7 Reduced churn rates in mobile, long distance and premium TV

Chief Executive, Chris Anderson, said Cable & Wireless Optus' first half results were strong and the company was firmly on target to achieve its full-year Prospectus forecasts. Total mobile customer base grew 12 per cent to more than 1.8 million compared to the same period last year. The company achieved nine times as many net mobile customer adds compared to the previous six months.

In its services to corporate and business customers, Cable & Wireless Optus achieved 29 per cent revenue growth. The company currently services around 90 per cent of Australia's top 150 corporates.

More than 49 per cent of growth in revenue by services to the business and corporate market came from an increase in demand for data, and other related services.

In the half year the company recorded sales revenue of $1,613 million, compared to $1,455 million for the same period last year.

Abnormals for Y2K and the early payment of an interest penalty totalled $90 million - giving a post-abnormal loss of $66 million " compared to a loss of $84 million last year. Mr Anderson said the company's profit before tax and abnormals was achieved with 11 per cent revenue growth and strong cost controls.

"Operating costs rose only three per cent during the period principally as a result of a significant rise in staff productivity," he said.

"These results provide us with the solid platform we need to achieve our expected stronger second half performance."

Earnings before interest and tax (EBIT) rose 205 per cent flowing from strong trading results and increased efficiency.

During the first half, Cable & Wireless Optus' gearing fell significantly as a result of last November's highly successful $2.9 billion equity raising. The company's debt to equity ratio fell from 188 per cent to 18 per cent (between June to December 1998).

Capital expenditure fell to 26 per cent of revenue, down 5 percentage points on December 1997, while operating cash before interest more than doubled to $209 million. The overall result was a 27 per cent fall in net funding requirements.

Looking forward, Mr Anderson said the company's emerging businesses, in particular local telephony and Internet, will make a larger contribution to revenue growth in the second half as Cable & Wireless Optus continues its ramp-up of broadband network installations.

"Cable & Wireless Optus has come of age. We are firmly on target to meet our full-year forecasts," he concluded.

For more information:
Stephen Woodhill
Cable & Wireless Optus
Phone: 02 9342 7846