Tata Confirms Interest In C&W Bid

Indian conglomerate Tata Communications Ltd has confirmed speculation that it is considering a possible purchase of Cable & Wireless Worldwide (C&WW) plc.

The acquisition, if it were to go ahead, would give Tata a foothold in the UK communications sector, expanding its international fibre optic cable network and giving it a lot of cable within the UK.

Preliminary Interest

Tata confirmed its interest in a statement and said that its interest is still at the preliminary stage.

“Tata Communications Ltd notes the press speculation in relation to Cable & Wireless Worldwide plc and confirms that as part of its ongoing review of potential acquisition opportunities, TCL is evaluating a possible cash offer for C&WW. TCL would like to emphasise that considerations are at a very preliminary stage,” it said.

However Tata is not the only one interested in C&WW.

Last month Vodafone became the first to show its hand after it admitted it was considering a possible bid for the company. The acquisition would instantly give it – and Tata for that matter – its own fixed-line assets in a 150 countries around the world, including the UK.

C&WW Statement

C&WW is a standalone entity after it demerged from Cable & Wireless Communications in March 2010, and since that time CWW has struggled with a number of profit warnings. Cable & Wireless Communications on the other hand operates mostly in the Caribbean, Panama, and Macau regions.

Brokerage firm Sanford C. Bernstein has previously valued a possible acquisition of C&WW could be valued at £700 million to £900 million.

Cable & Wireless Worldwide noted Tata’s interest in a brief statement.

“The Board of Cable & Wireless Worldwide plc notes the announcement by Tata Communications Ltd today that it is in the preliminary stages of evaluating a possible cash offer for C&W Worldwide,” it said.

Attractive Assets

C&WW is attractive because its international cable network spans approximately 425,000km, while it also has the UK’s largest fibre network that stretches some 20,500km in length.

Unlike BT or Virgin Media’s networks however, C&WW’s fixed-line network is mostly dedicated to business users and offers voice, data and hosting services to companies such as Next, Tesco and United Utilities. Its fixed-line network is used by mobile operators to provide links to mobile transmitters and switching offices – a process known as wholesale backhaul.

In the UK, C&WW has a nationwide network that combines fibre, digital, microwave, radio and leased circuits. This network has presence in over 400 towns and cities in the UK, with more than 864 unbundled exchanges covering 56 percent of the population. Hence the interest from Vodafone and now Tata.

Tata Communications is essentially a provider of communication services mostly in emerging markets such as India thanks to its global and pan-India network, however recent announcements such as its deal with Forumla One, have raised its profile somewhat.

Tata claims that it has one of the most advanced and largest submarine cable networks in the world, with connectivity to more than 200 countries across 400 PoPs, and nearly 1 million square feet of data centre and colocation space worldwide.

Tata has until 29 March to make a decision about C&WW, but it may have to move smartly, as besides Vodafone, other operators such as Spain’s Telefonica (owner of O2) are also rumoured to be  mulling a possible bid.

How much do you know about microprocessors? Take our quiz!