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Vodafone contemplating bid for Cable and Wireless

UK-based carrier Vodafone has confirmed that it is mulling the prospect of taking over Cable & Wireless Worldwide (CWW). The latter’s international backbone network would bolster the core bandwidth available to Vodafone.

The Cable & Wireless cable network serves 150 countries directly or through local partners. It also operates a UK fibre network serving businesses.

“Vodafone regularly reviews opportunities in the sector and confirms that it is in the very early stages of evaluating the merits of a potential offer for CWW,” the operator said in a statement.

“There is no certainty that an offer will be made nor as to the terms on which any offer might be made. Any offer, if made, will be in cash but Vodafone reserves the right to change the specie of consideration. A further announcement will be made in due course, if appropriate.”

David Molony, principal analyst at Ovum believes the potential takeover would have repercussions far beyond the UK market.

“A merger would give Vodafone significant global network for fixed services to complement or even integrate with its mobile operations worldwide, and give it a significant position in global enterprise services. Second, it fits with an Asia-Pacific growth strategy for Vodafone – CWW has the highest penetration of the business fixed services market in Asia-Pacific of the European and US-owned telecoms service providers.

“However, becoming a fully-integrated telco will make life complicated for Vodafone too. It has some major contracts with global MNCs that get their fixed services from other telcos like BT. Those customers who want more collaboration on fixed-mobile services will wonder where Vodafone’s ownership of CWW leaves them.”

Vodafone is required to either announce a firm intention to make an offer or announce that it does not intend to make an offer, in accordance with Rule 2.7 of the London Stock Exchange’s Takeover Code, by not later than 5pm on 13 March 2012.

Written by Dawinderpal Sahota.

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