(Bloomberg) ? Cable & Wireless Plc, the U.K.?s second-biggest phone company, plans to expand overseas through acquisitions as part of a strategy to focus on faster-growing markets.

?We are looking for acquisitions in markets that have populations of less than 7 million,? Cable & Wireless International head Harris Jones said on a conference call. ?We think acquiring full-service businesses is very important, or ones that have the potential to be so.?

Cable & Wireless, based in Bracknell, England, is seeking new opportunities in markets overseas as growth in the UK for traditional voice services has slowed. Jones told analysts and investors that margins at the company?s international businesses will improve because of sales growth and lower costs.

Jones declined to name companies that Cable & Wireless might consider buying and wouldn?t name countries where it will focus.

Last year, the company had an operating loss of ?121 million ($230 million) on sales of ?3.23 billion. About ?1.21 billion, or 37 percent of last year?s revenue, came from the company?s international businesses, Jones said.

Cable & Wireless shares rose 1.75 pence, or 1.4 percent, to 131.5 pence in London. The stock has gained 8.8 percent this year.

Cable & Wireless may purchase companies with annual sales of as much as $300 million, Jones told reporters on a conference call. ?We are now looking more actively,? Jones said, pointing to the company?s $205 million July offer to buy rival KeyTech Ltd. in Bermuda.

The company will take on some debt to make the purchases ?because today we have practically no leverage,? he said. The company wants a 15 percent return on capital and a 25 percent return on equity by the third year of an acquisition, he said.

When asked about the company?s 20 percent stake in Bahrain Telecom Co., also known as Batelco, Jones said ?we?ve indicated an openness to dispose of our stake in Batelco, but nothing more firm at this stake.?

He declined to comment further until the company completes the sale.

Jones reiterated comments from July, saying the company?s overall performance is ?in line with expectations.? He declined to say what the expectations were or management?s forecast.

Earnings before interest, taxes, depreciation and amortisation, or Ebitda, as a percentage of sales at the company?s operations outside the UK will rise to as much as 37 percent by fiscal 2009 from 34 percent in fiscal 2006, the company said in a statement.

Cable & Wireless will increase the cash it brings to the UK from its international business to 100 percent this year from 92 percent in the year ended March 31, the company said.

Jones said the company?s international activities will have an advantage over competitors because in many regions it is the only provider offering multiple services.

As part of its international expansion, the company will offer new services in Monaco, which will serve as a model for the company?s expansion plans.

Cable & Wireless will benefit from servicing the hotels and casinos in Macau with the company?s mobile, broadband, fixed line, data and international services, Jones said. Macau, about one hour by ferry from Hong Kong, attracts 21 million visitors a year, the company said.

?We are taking advantage of the economic boom as Macau overtakes Las Vegas as the world?s largest casino centre,? Jones said. ?There is going to be very, very strong and robust growth in that marketplace.?