Telecom Lead India: Tata Communications has decided to
pull out from the race for Cable & Wireless Worldwide Plc of the U.K.
Tata Communications has decided not to spend $2 billion on
Cable & Wireless Worldwide as Tata Communications could not reach an
agreement with CWW on offer price.
Since Tata Communications is pulling out, Vodafone will
become the only bidder for CWW. According to media reports, Vodafone is
planning to spend 700 million pounds to buy CWW.
CWW operates the U.K. and derives a third of its annual
revenues from the dumb pipe work of carrying the traffic for other telecoms
companies rather than those of its own direct corporate clients.
According to the 2011 annual report, 700 million pounds of CWW’s 2.2 billion pounds in annual revenues comes from carriers. More than 60 percent of
its international revenues of 557 million pounds are accounted for by carriers.
In the U.K., CWW has contracts with 70 of the 100 largest
blue chip companies, according to Barclays Capital, as well as the BBC and
government departments such as the Foreign and Commonwealth Office.
Recently, Cable & Wireless Worldwide said the current
capital expenditure program has been reviewed with 20 million pounds of 2012 capital
expenditure projects being put on hold.
On March 29, UK takeover regulator had allowed extension of
the bid deadline by another three weeks to April 19, giving the two potential
bidders some additional days to fine tune their bids. The extension was given
after CWW told the regulator that more time was needed for its bidders to
evaluate whether to make a formal offer for the company.
CWW recently said it has executed its long term plans with
the aim of reducing support function cost. Headcount in support functions is
down 7 percent since the beginning of 2011/12 and will fall further by the year
end.
Several internal projects have been postponed and CWW is
seeking savings in procurement. CWW is in the process of developing plans to
further reduce the cost base through process efficiency and reduced cost per
employee. All senior managers have been targeted to deliver run rate cost
savings as part of the 2012/13 budget process.
