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Tata Communications ‘may bid’ for CWW
02 March 2012
Tata Communications to challenge Vodafone in potential bid for Cable & Wireless Worldwide, but Indian government may object
Cable & Wireless
Cable & Wireless Worldwide
Indian operator Tata Communications could bid for UK-based operator Cable & Wireless Worldwide in a deal which may raise TCL’s turnover to almost $6 billion.
Vodafone has already expressed an interest in CWW, a mainly enterprise operator that was split off from Caribbean-focused fixed and mobile operator Cable & Wireless Communications in 2010.
Tata’s statement to the London Stock Exchange said: “TCL is evaluating a cash offer for CWW. TCL would like to emphasise that considerations are at a very preliminary stage.”
However the two declarations by Vodafone and Tata of their interest may spark other potential bidders from worldwide companies in CWW’s business, which has a UK enterprise network as well as international submarine cables and enterprise business in Africa, Asia and elsewhere.
Tata Communications, headed by Vinod Kumar, has been increasingly aggressive in the world market. In late February Kumar announced a deal to provide communications to Formula One, the motor racing organisation.
However reports from India say that the Indian government, which owns 26% of Tata Communications, may oppose the network operator’s planned acquisition, and the Department of Telecom has raised objections to its expansion plans considering the performance of certain TCL subsidiaries.
TCL reported two consecutive years of losses in 2009-10 and 2010-11. The company’s cash amounted to only $146 million as of March 2011, whereas current prices are likely to value CWW at $1.2-$1.4 billion. TCL has a restricted borrowing capacity, due to its debt of $1.71 billion. Equity would not be an easy option as the Indian government would not want a dilution in its stake, suggest local reports. GTB
Further reading from Global Telecoms Business:
West Africa Cable System 'completed' 22 Feb 2012
Vodafone confirms interest in CWW 13 Feb 2012
C&W Worldwide retains UK government deals 20 Oct 2010
CWW and Next sign network deal 18 Aug 2010