(Bloomberg) Shares of Cable & Wireless Plc., Britain?s second-biggest phone company, rose after the company resumed a ?250 million ($434 million) stock buyback.

Cable & Wireless, which suspended repurchases in August when it agreed to buy Energis Plc., expects to complete the takeover on November 11, Chairman Richard Lapthorne said on a conference call.

The stock gained as much as 5.25 pence, or 4.4 percent, to 124 pence before closing at 121 pence. The Bracknell, England- based company?s first-half dividend will rise 21 percent.

Cost cuts are under way again, Chief Executive Francesco Caio, said today. He said he?ll reveal plans for the combined group in February.

?If you?ve got a reasonably high risk appetite then you might look at this company today in expectation of the restructuring in the UK,? said Chris Alliott, an analyst at Nomura Securities in London. ?Anybody with a more moderate risk profile might think some evidence would be nice.?

Acquisitions, cost cuts and closed offices haven?t yet yielded the growth that Caio, a former executive at consultants McKinsey & Co., pledged for the UK business after he took over in April 2003.

Instead, the company is relying on divisions in other countries to prop up the UK unit, where sales dropped five percent. Revenue outside Britain, including units in Jamaica, Bermuda and Barbados, rose ten percent. The assets accounted for 40 percent of group sales.

Lapthorne said last month?s clearance of the Energis deal by the Office of Fair Trading gave him the confidence to buy back more shares. Cable & Wireless, which also reported a decline in first-half profit, needs the revenue from Energis as demand for new technology drives down the price of traditional services.

?The stock is up for three reasons,? said Christian Maher, an analyst at Investec Securities. ?The results are not worse than expected, the dividend rise is a bit higher than people were forecasting and the share buyback has been resumed. Operationally, this is still a company with challenges.?

Profit in the six months ended Sept. 30 dropped 56 percent as prices fell. Net income slumped to ?92 million, or 3.8 pence a share, from ?207 million, or 8.3 pence, a year earlier.

Sales gained less than 1 percent to ?1.48 billion, beating analyst estimates of ?1.47 billion.

The ?674 million Energis takeover will add business customers such as the British Broadcasting Corp.

Last month, Cable & Wireless said sales stalled after the agreement and it shelved some cost-cutting plans until it could establish what resources the enlarged group might need.

Like former monopoly BT Group Plc. and most other UK phone companies, Cable & Wireless is tackling a technological transformation as corporate customers swap to cheaper Internet- based networks that can carry everything from video to voice. The new services save the client money and are less lucrative than those over a standard fixed-line phone, a device invented in 1876. The UK operating margin at Cable & Wireless fell to 2.5 percent from 5.1 percent a year earlier.

?This is not a one-off blip in the market,? Caio, 48, told reporters on a conference call. ?We?re right in the middle of a transition 68 percent of the market is in decline.?

The Energis takeover may help Caio address the slump. Revenue at Energis from selling services to business customers rose 18 percent in the six months ended September, it said today. At Cable & Wireless, sales to the same market in the same period sank 13 percent.

Cable & Wireless suffered three straight annual losses between 2002 and 2004. Caio stemmed the flow last year after exiting the US and Japan and scaling back the workforce to levels last seen in the 1980s.

The company, which employed more than 37,000 in 1990, now has about 14,000 staff.

Caio last year bought Bulldog Communications Ltd. to spearhead a drive into the UK high-speed Internet market.

The unit has been under investigation by the industry?s regulator, Ofcom, after it double-billed some customers and missed connection deadlines for others.