CABLE & Wireless pleased its followers with profits ahead of expectations, but disappointed some analysts by giving only a sketchy idea of its immediate strategy.

Profits rose 13% to #1597m in the year to March, excluding exceptionals, which included a #92m provision for a legal case against the group in the US. The major subsidiary, Hongkong Telecom, contributed about two-thirds of total profits. Dividends are raised by 10% to 12.25p. C&W shares were finally up half-a-penny at 679.5p.

Group chief executive Richard Brown explained the group had refocused and grown the customer base by 70% to 17 million ''in pursuit of our belief that owning the customer is the key''.

C&W has invested #3100m in its networks and lifted operating cash flow 21% to #2700m, and Brown said the group had joined the ranks of high-performance companies.

''As the third biggest international operator in the world, Cable & Wireless remains committed to exploiting our global strengths to continue to create shareholder value,'' he said.

The group has secured the future of HK Telecom, bought a controlling interest in C&W Panama, doubled its stake in Optus in Australia and formed C&W Communications in the UK.

C&W's strategic alliance with Telecom Italia, announced last month, gives it access to nearly 140 urban markets around the globe and C&W plans to raise this to 200 with licences in key European cities by the end of this year.

''We will target probably an additional 60 (urban) markets,'' Brown said. ''Every major market in Europe is on our list.''

C&W effectively abandoned Europe last year when it pulled out of an alliance with VEBA after disagreements over the German utility's spending plans for networking infrastructure.

C&W now aims to invest around #100m over two years, and Brown said that with Telecom Italia, the company was stepping forward ''with our eyes open and a common mindset to move quickly''.

The group is also considering raising its 53% stake in Britain's biggest cable company, Cable & Wireless Communications (CWC). This follows the decision of BCE of Canada to sell its 14.25% holding.

Brown re-iterated that both C&W and Telecom Italia wanted to expand their presence in the US and would ''talk jointly about how to do that''.

C&W could either organically grow its existing #712m US business, launch an acquisition or ''dance with an elephant'', as Brown called the huge US telecom carriers emerging from a bout of consolidation.

C&W remains undaunted by the high price of US companies.