MUMBAI: Tata Communications Ltd is eyeing Cable & Wireless Worldwide Plc (CWW) - a London-listed telecom giant with origins in the British imperialist days - signalling the return of India's largest private conglomerate to bulge-bracket global buyouts. The $84 billion Tata Group's telecom arm may be vying with Vodafone for the potential acquisition, which is still in early stages, said sources directly briefed on the matter.
CWW may attract valuation upwards of $1.2 billion for its voice-, data- and IP-based services to large clients across four continents. The troubled company's market value has declined over 70% in the past 24 months, broadly reflecting the woes of the global telecom sector, but making it possibly the least expensive target in the industry. Tatas are preparing to launch a bid for the asset, possibly in the next two weeks.
The deal, if it goes through, would be significant providing Tata Communications with a larger footprint in voice and data carrier businesses as well as in the undersea cable network.
CWW owns 4,25,000km of cables connecting more than 150 countries, with strong presence in most of the former British colonies. The company's association with India goes back to 1870, when it laid the world's biggest submarine cable station from Mumbai (then Bombay) to Porthcurno in England.
About one-third of Cable & Wireless Worldwide Plc's (CWW) £2.2 billion revenues come from carrying internet and voice traffic for other telecom companies. Will Cameron, a spokesman for CWW, declined to comment on the potential interest from the Tata Group. Rothschild and Barclays Capital are advising CWW to explore strategic options after being approached by the suitors. An emailed query to Tata Group remained unanswered at the time of going to press.
Tata Group has built its presence in the data carrier business through acquisitions -VSNL (now Tata Communications) in 2002, Tyco International (US) in 2004 and Teleglobe ( Canada) and Neotel (South Africa) in 2009. The NYSE-listed Tata Communications has invested more than $3.6 billion since 2002 in acquiring and building network and entering new markets. Roughly 75% of company's $2.6 billion revenues come from the overseas market.
"The acquisition will be complementary to Tata's existing infrastructure allowing them to consolidate low-cost position in the bandwidth provisioning. This will also reinforce India's position as an outsourcing hub providing services to both enterprises and operators with a comprehensive set of solutions," said Thomas Kuruvilla, managing director of Arthur D Little, a management consulting firm. CWW, which has holdings in 60 global cable systems, could trigger fresh consolidation in a capital intensive sector with high capacity.
"But Tata should be very careful about the purchase price," Kuruvilla added. "CWW has 60% of its revenues from UK and with the UK economy not doing well, it can face headwind. CWW's IP and voice business have very low margin, therefore Tata Communications will have to look at CWW cost structure as well as effectively utilize its network to grow the overall business volume." Bharti Airtel and Reliance Globalcom could also look at CWW but there was no confirmation on that count.
(Source- http://economictimes.indiatimes.com)
CWW may attract valuation upwards of $1.2 billion for its voice-, data- and IP-based services to large clients across four continents. The troubled company's market value has declined over 70% in the past 24 months, broadly reflecting the woes of the global telecom sector, but making it possibly the least expensive target in the industry. Tatas are preparing to launch a bid for the asset, possibly in the next two weeks.
The deal, if it goes through, would be significant providing Tata Communications with a larger footprint in voice and data carrier businesses as well as in the undersea cable network.
CWW owns 4,25,000km of cables connecting more than 150 countries, with strong presence in most of the former British colonies. The company's association with India goes back to 1870, when it laid the world's biggest submarine cable station from Mumbai (then Bombay) to Porthcurno in England.
About one-third of Cable & Wireless Worldwide Plc's (CWW) £2.2 billion revenues come from carrying internet and voice traffic for other telecom companies. Will Cameron, a spokesman for CWW, declined to comment on the potential interest from the Tata Group. Rothschild and Barclays Capital are advising CWW to explore strategic options after being approached by the suitors. An emailed query to Tata Group remained unanswered at the time of going to press.
Tata Group has built its presence in the data carrier business through acquisitions -VSNL (now Tata Communications) in 2002, Tyco International (US) in 2004 and Teleglobe ( Canada) and Neotel (South Africa) in 2009. The NYSE-listed Tata Communications has invested more than $3.6 billion since 2002 in acquiring and building network and entering new markets. Roughly 75% of company's $2.6 billion revenues come from the overseas market.
"The acquisition will be complementary to Tata's existing infrastructure allowing them to consolidate low-cost position in the bandwidth provisioning. This will also reinforce India's position as an outsourcing hub providing services to both enterprises and operators with a comprehensive set of solutions," said Thomas Kuruvilla, managing director of Arthur D Little, a management consulting firm. CWW, which has holdings in 60 global cable systems, could trigger fresh consolidation in a capital intensive sector with high capacity.
"But Tata should be very careful about the purchase price," Kuruvilla added. "CWW has 60% of its revenues from UK and with the UK economy not doing well, it can face headwind. CWW's IP and voice business have very low margin, therefore Tata Communications will have to look at CWW cost structure as well as effectively utilize its network to grow the overall business volume." Bharti Airtel and Reliance Globalcom could also look at CWW but there was no confirmation on that count.
(Source- http://economictimes.indiatimes.com)
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