Cable &Wireless Worldwide’s performance for the six months to September was weak but made to look worse by one-offs

Underlying performance continues to be hit by strong competition and loss of voice revenue, but the impact of this has been made worse by underinvestment in data centres and neglect of the wholesale and SME businesses

The outlook for the year to March 2012 is poor, in line with the June warning. Beyond that, further investment in hosting and related capabilities will be necessary, and we continue to expect modest growth

Openreach has announced large cuts in the prices of some important components of physical infrastructure access (PIA). A further substantial reduction in duct prices is possible as a result of an adjustment by Ofcom to Openreach’s regulatory asset value (RAV)

The reductions are helpful to the economics of bids by altnets such as Fujitsu for government funds to deploy rural next generation access (NGA), and to Virgin Media, as it expands its existing cable network footprint

However, the economics of NGA continue to strike us as challenging and we expect the impact of PIA on BT to be modest due to the remaining potential wholesale revenue, and BT Retail’s ability to use third party PIA-based networks

C&W Worldwide’s performance over the year to March was weak, with the most meaningful metrics showing positive but very low growth

The sharp decline in the mid-market business appears to be over, but price pressure and accelerating loss of ‘traditional’ voice revenue is preventing further progress

Guidance for the year to March 2012 is uninspiring. Beyond that, growing momentum in cloud services and the overseas businesses should generate more significant progress, but organic growth looks set to remain modest

Some of Ofcom’s proposed wholesale charge controls for Openreach fixed access services sound stringent

However, we estimate that the overall financial impact on BT and other players is likely to be very small

We do not expect the proposals to result in changes to many retail prices, but they should tilt the playing field slightly in favour of BT Retail’s competitors, particularly smaller providers of broadband and business services

International performance was hit by problems in Jamaica and was weak generally except for Panama and Macau

Further consolidation could lie ahead for the UK commercial radio sector. EMAP is expected to offer its radio assets for sale and Scottish Media Group plans to divest Virgin Radio. The battleground is competition for listeners drawn by the BBC's increasingly popular national radio networks. This report however examines past consolidation, which produced substantial cost savings, without noticeably improving the commercial sector's fortunes. In our view, for consolidation to succeed in this regard, much greater attention will need to be paid to improving content

The performance of the international business remains solid

Scottish Media Group’s decision to sell its Virgin Radio business has been prompted by the need to pay down group debt and the management’s decision to refocus on the turnaround of its ITV service. This report outlines our views on the management pronouncements made on the success and performance of Virgin Radio and, therefore, its value to investors. We consider that management has exaggerated the potential value of this asset to investors