There has been renewed speculation that UK enterprise telco Cable & Wireless Worldwide (CWW) will be an acquisition target for a mobile operator, with AT&T, O2 (a subsidiary of Spanish telco Telefonica), Verizon, and Vodafone being the prime…
There has been renewed speculation that UK enterprise telco Cable & Wireless Worldwide (CWW) will be an acquisition target for a mobile operator, with AT&T, O2 (a subsidiary of Spanish telco Telefonica), Verizon, and Vodafone being the prime candidates.
CWW’s shares closed yesterday at 46.83p on the London Stock Exchange. This was a decline of almost 50% from the year-high of 92p, on the back of a profit warning and rumours of managerial disputes.
Reuters reported yesterday that the acquisition of CWW would enable operators like Vodafone or O2 to offset some of the pressures caused by fast-growing consumer internet traffic by transferring it to CWW’s fixed network.
CWW said it would not comment on market speculation.
Today, CWW’s share price has increased, trading at 49.63p at 2.37pm.
Takeover rumours since 2009 demerger
CWW, along with Cable & Wireless Communications, emerged from the demerger of Cable & Wireless in 2009. Rothschild and Gleacher Shacklock acted as joint sponsors, while Allen & Overy was legal adviser.
Gleacher Shacklock refused to comment. Rothschild and Allen & Overy did not reply to questions before the press deadline.
Financial advisers on the demerger were Barclays Capital, BNP Paribas, JP Morgan, Lloyds TSB and RBS.
CWW provides voice, data and IP-based services to companies and governments around the world. It also claims to have the UK’s biggest fibre network dedicated to business customers.
Takeover rumours have surrounded Cable & Wireless since before its demerger, and since it, speculation has dogged CWW.
AT&T and Verizon have been touted as the most likely potential buyers, but bankers have cautioned that the US telcos are prone to “window shopping”.
New speculative subject Vodafone would make a sensible suitor due to its current strategy of focusing on markets where it already has a presence.
It has sold out – or is in the process of selling out – minority stakes in China Mobile, SFR and Polkomtel. In March it announced that it would be paying the Indian conglomerate Essar E5bn to buy its 33% stake in their Indian JV, Vodafone Essar.
Vodafone Italia is also demonstrating its interest in fixed-line by participating in the auction for the Italian fibre network owner Metroweb.
Persistent reports in 2010 also suggested that Vodafone was considering an attempt to acquire the UK fixed-line operator TalkTalk.
AT&T declined to comment. Verizon and Vodafone did not reply to questions before the press deadline. A spokesman for Telefonica, which owns O2, said: “There are no plans whatsoever for Telefonica to acquire Cable & Wireless.”
Profit warning and managerial disputes – reports
In March, it released a statement saying that it expected its EBITDA for 2011/12 to be at the same level for 2010/11.
This was interpreted as a profit warning by many, sending the share price down around 14%.
CWW CFO Tim Weller resigned in March, reportedly after threatening to quit after the board ignored his advice to lower its profit guidance.
The company said that he would be leaving his job on 1 July in order to “pursue new challenges”.
CWW will release its 2010/11 annual report later in May.
Its EBITDA for the year 2009/10 was £377m, up from £250m for 2008/9. Its profit for 2009/10 was £1m, up from a loss of £32m in 2008/9.
