Big news for the UK this morning: Vodafone, one of Europe’s biggest mobile operators, has made a formal offer to buy up the assets of Cable & Wireless for £1 billion ($1.7 billion), a deal that catapults Vodafone into running its own fixed line network in the UK and specifically will give it a much bigger view on to winning enterprise business — a big challenge to BT.
Cable & Wireless, once one of the biggest operators in Europe, has fallen on hard times more recently and has run through three chief executives since a restructuring in 2010.
According to Vodafone’s statement to the market, Vodafone will offer C&W shareholders 38 pence in cash for each C&W share, a premium of 92 percent to C&W’s closing price on February 10 (when Vodafone had first made its offer). It says that both sides have reached agreement on that deal and that C&W directors will recommend the buy to shareholders.
The deal opens a new opportunity for Vodafone to offer networking services for enterprises, which form the core of C&W’s customer base at the moment, but as Vodafone CEO Vittorio Colao noted in the statement Vodafone could also use C&W’s extensive international network to offload its mobile network traffic in other markets:
“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 will also give Vodafone its first crack at owning a broadband network: that could mean more consumer services from the carrier, too, to compete against incumbent operator BT.
