Cable & Wireless shares plunge following announcement it will buy Columbus

Cable-Wireless-CommunicationsLONDON, United Kingdom, Thursday November 6, 2014, CMC – Telecommunications giant Cable & Wireless Communications (CWC) fell by 8 per cent after issuing shares to pay for a US$1.85 billion Caribbean deal.

The company is buying privately owned Columbus International, a fibre-based telecoms company serving the Caribbean, Central America and Andean region, which is backed by cable television billionaire John Malone.

CWC is funding the deal by paying US$707.5m in cash, issuing 1.5 billion new shares to the vendors and placing shares worth nearly 10 percent of the company to help fund the cash element.

“If all goes to plan Malone will end up with around 13 percent of the company,” the Guardian said.

CWC said the deal would help expand its presence in the region, adding Columbus’ 700,000 residential customers.

“This is a transaction that transforms CWC, providing a step change in growth and returns,” said CWC chief executive Phil Bentley. “Columbus offers complementary TV, broadband and B2B capabilities in complementary markets.”

CWC also said first half revenues rose 1 per cent to US $848m and core earnings climbed 5 per cent to US$277m.

“Acquiring Columbus should allow CWC to reach the endgame that Marlin [its investment programme] was intended to deliver faster and with less execution risk,” analyst Jerry Dellis told the Guardian newspaper. “It also leaves a more duopoly market structure across CWC’s footprint, eliminating the competitive risk that would have remained had Columbus remained as a (strong) rival.

“We think Columbus accelerates the delivery of CWC’s strategic aims and should create better long-term market structures,” he added.

Columbus has about 700,000 residential customers in the Caribbean, Central America and the Andean region.

In the Caribbean, it provides “triple-play” cable TV and broadband services over its fibre network.

Through its wholly owned subsidiary, Columbus Networks, Columbus provides connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region.

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