Vodafone has admitted it is considering buying Cable and Wireless Worldwide (CWW) following speculation over a possible £700m acquisition.
The news follows the appointment of Gavin Darby from Vodafone as the CEO of Cable and Wireless Worldwide last year.
“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,” said the company in press 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, said: “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."
But Phil Codling, analyst at TechMarketView, warned that the an acquisition of the whole of CWW by Vodafone could be a bad move, following a CWW profit warning.
“Naturally Vodafone is aiming to increase wallet share from its enterprise and public sector customers. But buying an operation that still needs whipping into shape could be the hard way to go about it, especially when it covers services that would be outside Vodafone’s comms-centric comfort zone. Besides, it’s notoriously hard to make money from the sorts of corporate ICT services that CWW provides – just ask BT Global Services,” Codling said.