TELECOMS group Colt will withdraw around 85 per cent of its voice contracts – or calls from mobile operators that it carries on its network – over the next few months as part of a review of the business.
Colt’s shares crashed 10.1 per cent on the announcement yesterday to close at 130p.
On the restructuring chief executive Rakesh Bhasin said: “I believe this structure will provide the focus we need to address challenges in the marketplace. I am confident that these changes will help us grow the business and improve profit margins in future years.”
Colt, which runs fibre-optic networks and data centres for large and mid-sized companies, said its plans would involve job cuts and charges of about €30m in the second half of this year. The contracts are worth around €175m (£143.5m) in yearly revenues.
For the first three months of the year, Colt reported annual revenue growth of two per cent to €399.8m, while its earnings before tax, depreciation and amortisation fell nearly eight per cent to €74.1m due to lower margins, customer churn and pricing pressures in bandwidth products.
Analysts at FinnCap, which stuck to a sell rating on the stock yesterday, said Colt still has potential as a takeover target “while in a period of weakness and change”. Colt is majority-owned by fund manager Fidelity.