Vodafone buys Cable&Wireless Worldwide for £1bn+

Multinational telecommunications company Vodafone is to buy 150-year-old British fixed communications provider, Cable&Wireless Worldwide, for more than £1 billion, the companies announced on Monday.

Vodafone said that the deal, which will go through pending shareholder approval, would strengthen its enterprise business in the UK and internationally.

Vittorio Colao, CEO of Vodafone Group, said that the CWW board had unanimously recommended Vodafone’s offer, adding the the acquisition would make Vodafone a "leading integrated player in the enterprise segment of the UK communications market and brings attractive cost savings to our UK and international operations."

In a presentation accompanying the announcement of the takeover, Vodafone said that CWW’s fixed infrastructure capacity would be used to handle Vodafone’s mobile data traffic in the UK and internationally. The move comes as smartphone ubiquity is putting strain on the capacity of cellular networks.

Indian giant Tata Communications pulled its bid for CWW on Friday, saying it was unable "to reach agreement with CWW on an offer price".

CWW owns more than 20,000 kilometres of fibre cable in the UK, and more than 400,000 km worldwide. In summer 2009, then-CEO Jim Marsh told Information Age that the company has "arguably more [international cabling] than anyone else". Marsh said that CWW’s infrastructure across the far East give it a leg up in the provision of business process outsourcing regions beyond India.

"We’re finding that customers are willing to offshore not just to India, but also to other places like the Philippines, Cambodia and Vietnam. Anything like that works well for us because we have so much capability over there,” he said.

In the last financial year, CWW’s revenues fell 0.4% to £2.3 billion, while profit before tax increased 23% to £143 million. The company’s 2011 revenues were split evenly between traditional voice services and IP and data services, making up 44% each. Hosting and applications made up the other 12%.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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