LONDON (AP) ? Cable & Wireless Group Plc, Britain's second-largest telecommunications company, reported a sizeable drop in annual earnings yesterday as price declines and depreciation costs eroded profitability.

The company said that net income fell to 79 million ($147.9 million) in the year ended March 31, down from 294 million a year earlier. Revenue climbed 9.6 percent to 3.23 billion ($6 billion).

The company, which has undergone significant restructuring in the past three years ? including shedding half its work force ? offered some hope to investors by increasing its divided by 18 percent to 4.5 pence a share (8.4 cents).

"The rise in the dividend reflects the increased visibility of the future prospects for the group, which the move to the execution phase of our turnaround gives us," said chairman Richard Lapthorne.

C&W's restructuring follows difficulties in expanding its core British business and a decision to pull back from a 9 billion ($16.9 billion) plan to become a global carrier for large businesses.

The company last year acquired Energis, a British fixed-line telecommunications company and in January it split the entire group into two self-contained operational units ? its British business and its National Telecoms division which comprises a score of minor operations in small economies in the Caribbean, Asia and Europe.

Analysts said the new structure has the potential to boost shareholder value by improving its position as an acquisition target.

"In the last three years, we have removed substantial risks to the group's financial security with exits from unsustainable markets," said Lapthorne. "We have successfully rebalanced the international business towards the growth areas of broadband and mobile, whilst absorbing the impact of liberalisation."

C&W shares fell 2.5 percent to close at 97.5 pence ($1.83) on the London Stock Exchange.