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Telecoms firm Cable & Wireless has beaten forecasts with an underlying earnings rise of 23 per cent for the year.

Group earnings before interest, tax, depreciation and amortization (EBITDA) rose 23 per cent to £605 million, while group profit before tax was up 57 per cent to £308 million.

Cable & Wireless also fuelled rumours of a demerger. After the company was divided into two standalone units in 2006: Europe, US and Asia, and International, analysts have been expecting a full split.

Chairman Richard Lapthorne said: "We introduced two standalone business units to Cable & Wireless in 2006. The new structure has brought increased focus to both businesses and we're pleased to report in 2007/08 we have passed several important milestones.

"So financially and operationally, Cable & Wireless is demonstrating the necessary momentum for the board to consider the next steps to deliver further value for shareholders."

The group added that its pension scheme – which could have stood in the way of splitting the company – is now fully funded.

The Europe, US and Asia business unit has now returned to revenue growth on the back of strong demand for IP, data and hosting products in these regions, the company said.

International sales are also performing strongly as Cable & Wireless is now focussing on higher-margin products, the company added.

For the year 2008/2009, Cable & Wireless forecast EBITDA in the range of £702 million to £725 million, representing EBITDA growth of 16 per cent to 20 per cent.

Shares in Cable & Wireless were trading 2.36 per cent higher in mid-morning trading, to 156.10p.