Vodafone looks at buying CWW
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[February 14, 2012]

Vodafone looks at buying CWW

(Guardian (UK) Via Acquire Media NewsEdge) Vodafone has confirmed it is considering a cash offer for Cable & Wireless Worldwide, expected to be worth around pounds 700m.

The offer for Britain's second largest fixed-line telecoms group - which has suffered a series of profit warnings and two changes of chief executive in the last year - comes as Vodafone seeks to bolster its network to cope with the explosion of internet traffic on mobile phones.


Shares in CWW surged 45% to 29p during trading, valuing it at nearly pounds 800m, before settling at 25.5p, a 30% premium to Friday's closing price. As recently as April 2010, CWW was worth pounds 2.5bn.

"Vodafone confirms it is in the very early stages of evaluating the merits of a potential offer for CWW," it said in a statement. "Any offer, if made, will be in cash, but Vodafone reserves the right to change the specie of consideration." CWW said it noted Vodafone's announcement and was "in the very early stages of evaluating the merits of a potential offer". Vodafone's shares nudged up 0.9% to 174p.


With smartphones and tablets, internet traffic over mobile phones has surged, forcing Vodafone and other operators to rent backhaul - cables that connect mast networks to the net. "Vodafone already pays the likes of CWW for backhaul, so they can offset that saving against the purchase price," said Mark James, a telecoms analyst at the broker Liberum Capital.

Cable and Wireless owns 425,000km of cables around the world. A third of its pounds 2.2bn in revenues come from internet and voice traffic for other groups.

(c) 2012 Guardian Newspapers Limited.

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