Vodafone admits giving C&W the eye

Vodafone has admitted eyeing up Cable & Wireless Worldwide, but says the relationship is still at the coy-glances stage with talks of a quick merger being premature.

Responding to press speculation, Vodafone says it would be prepared to pay cash for Cable & Wireless, should the company prove attractive enough. Rules governing public companies require that Vodafone make its position clear by 12 March, but until then both companies are free to keep their options open.

Vodafone reckons the idea of buying Cable & Wireless Worldwide came up during its regular review, and that it is "in the very early stages of evaluating the merits of a potential offer". Should Vodafone decide to make such an offer then it would probably use its cash reserves, but even that isn't a certainty.

The deal would be significant, and provide the the world's second-largest mobile operator* with a decent footprint in fixed telecoms. That might annoy existing partners, as Ovum's analysis points out. Vodafone often partners with fixed operators to provide integrated solutions, but with the addition of C&W it would no longer need those relationships, particularly in Asia-Pacific where Vodafone wants to expand and C&W has a decent presence.

It will be a month before we find out if Vodafone is proposing more than a brief fling with Cable & Wireless, but it is easy to see how both partners would gain from a union. ®

* China Mobile is the world's largest mobile operator, by customer numbers and revenue, though it's not so international.