Telecoms group Cable & Wireless - which has a major operation in Birmingham - yesterday said it had no immediate plans to demerge as it beat forecasts with a 29 per cent rise in underlying first-half core earnings.
The country's second biggest corporate telecoms company after BT raised its dividend by 47 per cent, increased the outlook for its Europe, Asia and US division (EAU) - formerly known as the UK business - and said its turnaround plan was ahead of expectations.
The news sent its share price up over four per cent.
C&W split itself into two separate units last year and unveiled plans to restructure its UK business, which had struggled due to overcapacity and falling prices.
Analysts speculated last year that the split could lead to a full demerger but finance director Tony Rice, while not ruling out such a move, yesterday said it had no immediate plans and would look at options in 2008 and 2009.
The EAU division beat forecasts with earnings before interest, tax, depreciation and amortisation (EBITDA) of £99 million and said it expected revenue to grow from the second half of 2007/08.
It also expects the division, excluding the C&W Access unit, to be cash-flow positive in the second half of 2007/08.
The group, with a history that dates back to the 1860s when telegraph cables were first laid overseas from Britain, reported EBITDA of £284 million for the six months to end-September, up 29 per cent on a reported basis and 40 per cent at constant currency levels.
Analysts were expecting first-half EBITDA of £267 million, with estimates ranging from £257 million to £281 million.
The international division, which comprises fixed-line, mobile and broadband operations in 33 countries, notably the Caribbean, increased EBITDA before exceptional items by six per cent but was hindered by problems at its Jamaican business.
The company increased its EBITDA out-look for the EAU unit by £35 million to between £205 million and £215 million, but lowered guidance for the international unit by $20 million (£9.7 million) to between $820 million and $840 million (£398 million and £407.7 million).
Its EBITDA outlook for the group for 2007/08 was in the range of £585 million to £610 million.
The international unit's chief executive, Harris Jones, is to leave at the end of the year.
Analysts at Dresdner Kleinwort said they expected a high-profile successor to lead the group through an eventual demerger.
"Two crucial issues that suggest the demerger is firmly on the cards is that the EAU business has now started to demonstrate revenue growth and in addition the company is focused on reducing risk around the pension, which is now in significant surplus at £211 million."
Finance director Tony Rice also said the group was looking at hedging its pension funds liability.
"There is nothing imminent," Mr Rice said. "I wouldn't expect anything to happen in the near future but we are scanning the market to see what can be done."
C&W confirmed that Mr Jones is quitting less than three years before he was set to receive a bonus windfall worth potentially more than £20 million.
Mr Jones is understood to be stepping down at the end of the year with a "golden goodbye" worth just under £5 million, substantially less than the possible bonus due under C&W's group's long-term incentive plan, which is now limitless after the group controversially moved to scrap the £20 million individual cap in July.
The firm remained tight-lipped on the reasons for Mr Jones's decision to step down.
He has helped drive a turnaround at the international operation amid tough competition, increasing the division's value by more than £1 billion.
Joint managing director and UK head John Pluthero will take over from Mr Jones as chairman of the international business in addition to his current role.
He will also pick up half of Mr Jones's entitlement to the potentially generous staff bonus scheme.
A hunt for a chief executive to lead the group's overseas arm will start soon, according to C&W.