Mobile operator Vodafone made it official
. It’s buying up the U.K.’s Cable & Wireless Worldwide (CWW) for £$1.04 billion (U.S.$1.7 billion) to bolster its enterprise and international services, as well as get access to C&W’s fiber network for backhaul and mobile traffic offload.
The purchase comes just a week after Tata Communications abandoned its bid for C&W, citing difficulty coming to pricing terms. Vodafone is paying 38 pence per share, a premium over the C&W’s current trading level. Vodafone said in addition to C&W’s enterprise portfolio, the network provider is a good fit, since its fiber net aligns well with the siting of Vodafone’s base stations, enabling Vodafone to “considerably” lower its backhaul costs. Pending regulatory approval, the deal is expected to close in the third quarter of this year.
Yankee Group Research VP Declan Lonergan comments
“Unlike most big acquisitions in the telecom sector, this one is predominantly driven by the opportunity for cost savings. Though the deal does offer Vodafone some opportunities for revenue enhancement in the enterprise space, the sweetest part is the potential for Vodafone to reduce its operating costs by utilizing the newly acquired fiber-optic network for mobile traffic backhaul. During the next two to three years, we expect those savings to be substantial and to help Vodafone’s bottom line at a time when top-line growth is proving elusive.”