C&W plans dividends to heal rift

PHONE giant Cable & Wireless plans to resume paying dividends next month, Financial Mail has learned.

Institutional investors expect Britain's second-biggest phone company to hand out 2p a share when it reports full-year results on June 2.

The payout will be an attempt by management, led by chairman Richard Lapthorne, to head off calls for a major handout of the group's remaining £2 billion cash pile. C&W's share price jumped earlier this month after one analyst predicted it would have to share out the money through share buybacks or a special dividend payment.

But Lapthorne, who skipped the dividend last year, has told investors he is determined to keep the cash. One shareholder said: 'As things stand C&W will not be permitted to get back on the acquisition trail in any large scale way. If dividends are restored, investors can see merit in allowing the group to keep money in the bank.' C&W has won plaudits for getting out of its disastrous US internet businesses more cheaply than expected, but there are still problems in its Caribbean operation and not all analysts believe the UK side has stabilised.

One told Financial Mail that despite a successful relationship with Tesco, which runs a home phone business on C&W's network, not everything was rosy. Shares in C&W closed at 120 3/4p, valuing the business at £2.9 billion.