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Vodafone Signs GBP1 Billion Takeover of Cable and Wireless Worldwide

Monday, April 23rd, 2012 (10:12 am) - Score 1,606
vodafone uk broadband

Communications provider Vodafone (Europe) has reached a “fair and reasonable” agreement to buy global telecoms giant Cable & Wireless Worldwide (CWW) for a cash offer of £1.044 Billion (38p per CWW share), which is well above the estimated £700m that had been hinted at during February 2012 (here) when news of the talks first broke.

Vodafone is now set to acquire the entire issued and to be issued ordinary share capital of CWW, which it will use to “strengthen the enterprise business of Vodafone Group in the UK and internationally“. The move is also said to present “attractive network and other cost saving opportunities for Vodafone Group“.

Indeed Vodafone would gain access to CWW’s unbundled (LLU) broadband network in the UK. The LLU network helps to supply a number of smaller and medium sized ISPs, such as Tesco, with flexible broadband internet access solutions. CWW’s UK telecoms and data infrastructure will also help to handle the growing data demands of Vodafone’s Mobile Broadband customers.

John Barton, Chairman of CWW, said:

Under the leadership of Gavin Darby, Cable & Wireless Worldwide has outlined a strategy to refocus the business on achieving sustainable cash generation and returns from capital invested. However, the offer from Vodafone announced today will enable shareholders to crystallise a value, in cash, that represents a significant premium to recent trading levels and avoid exposure to the risks inevitably presented by executing a medium-term improvement strategy.

Furthermore, the combination with Vodafone represents an exciting opportunity for Cable & Wireless Worldwide’s customers, employees, partners and other stakeholders to benefit from the many advantages that will come from being part of the Vodafone Group.”

Vittorio Colao, CEO of Vodafone Group, said:

We are pleased to reach agreement with the Board of Cable & Wireless Worldwide, who unanimously recommend our offer. The acquisition of Cable & Wireless Worldwide creates a leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations. We look forward to working with the management and employees of Cable & Wireless Worldwide to combine our expertise for the benefit of our customers and shareholders.”

It’s no secret that CWW has been struggling with financial problems, not to mention some all too frequent managerial changes. The company has reportedly lost around three quarters of its share value over the past year alone and recently issued several profit warnings. But for Vodafone the lower value has only made CWW more attractive.

But such a development might worry some of CWW’s LLU partners in the UK because Vodafone has a shaky history in the country’s fixed line broadband ISP market and gave up on its own ‘Vodafone At Home‘ service last December 2011 (here). On the other hand they don’t have any huge incentive left to go penalising their ISP clients.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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4 Responses
  1. Avatar dragoneast

    Another nail in the coffin of LLU perhaps? I can’t see Voda reversing their strategy and investing in it.

    I can’t see how residential broadband, especially with Ofcom’s dead hand, is profitable with the predictable results we’ve seen. Only those who can successfully cross-sell make money i.e. at the retail end, providing you’ve the economies of scale of BT, Sky and perhaps TT. The infrastructure providers are the squeezed middle.

    Voda are a mobile operation in the UK, and the C&W infrastructure will presumably give them a competitive advantage – if the serviced ISPs can get a few crumbs from the master’s table then so much the better, I suppose. EE look like they’re getting into bed with BT: so where does it leave O2/Be must perhaps be the question.TalkTalk?

  2. Avatar Deduction

    Yep RIP LLU from C&W, expect it to be replaced with throttled, monthly cap cack.

  3. Avatar Bob2002

    >Yep RIP LLU from C&W …

    I hope not, C&W’s unlimited LLU product is what I’m on at the moment and it’s excellent value for money.

  4. Avatar Nick

    Cable and Wireless Worldwide should re-enter the residential sector,integrate Thus and Demon and start inviting SME’s smaller businesses to its company. It should start doing. If it sold a residential service, it should be similar priced to BT and Virgin Media and be sold under the Cable and Wireless brand, advertising could be limited to comparison sites,telephone box advertising,newspaper ads and the street billboards. It should not aggressively advertise like it did with Bulldog as they were not ready for the influx of customers,this ultimately led to provisioning and billing problems. Focusing on big multi-nationals and government is an unreliable source of revenue, winning over customers from BT Business and Verizon is extremely difficult especially when there product portfolio is slightly better or even the same for the same cost or less. The problem with Cable and Wireless Worldwide started when they sold off some of there businesses such as One2one at rock bottom prices, if they had enough money at the time, they could have held onto the Cable franchises,acquired Telewest Communications and then rival BT more evenly with there own lines and infrastructure, with all that, focusing on Residential and small to medium businesses and then working with government and large multinationals they would have done well and most of there problems would have been ironed out by 2005

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