Vodafone has said it is in the 'early stages' of weighing up a potential offer for Cable & Wireless Worldwide.
The operator was the subject of weekend press reports claiming it was mulling over a £700m bid. CWW has issued several profit warnings during the past year and posted heavy losses in the six months to 30 September 2011. Former Vodafone chief executive Gavin Darby, who became the company's third CEO in a year, will outline a turnaround plan when he gives a trading update this Thursday (16 February).
In a statement posted this morning, a Vodafone spokesperson said: '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. 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.'
CWW sells telecoms and internet services to the police and companies including Tesco.
Ovum principal analyst David Molony 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.
'However, becoming a fully-integrated telco will make life complicated for Vodafone too. It has some major contracts with global MNCs that get their fixed services from other telcos like BT. Those customers who want more collaboration on fixed-mobile services will wonder where Vodafone's ownership of CWW leaves them.'