The European giants continue to look for holdings in new markets to offset saturation and recession in their home bases. Vodafone has confirmed it is in the early stages of assessing a possible bid for Cable & Wireless Worldwide while France Telecom is poised to increase its stake in Egypt's Mobinil, according Rethink Markets. Vodafone said in a statement, responding to press reports in the London Sunday Times, that any bid would likely be in cash. C&W Worldwide, which was split off from its Caribbean telecoms parent firm in 2010, has a market value of £542m ($856m) and The Times had speculated Vodafone could offer £700m. "There is no certainty that an offer will be made nor as to the terms on which any offer might be made," Vodafone said in its statement.
Other firms have been circling C&W Worldwide for some months - the unit rejected an unspecified offer last summer, while Pacnet said it had also studied the business, and private equity firm Apax Partners is now reported to be preparing a bid. C&W has been going through extensive reorganization after a string of three profit warnings within a year, facing the decline of its international submarine cable business, but it would bring Vodafone expanded landline and backbone capacity as well as a UK data center and managed networks arm. A former Vodafone executive, Gavin Darby, took over as C&W Worldwide CEO in November, the firm's third chief in a year.
In accordance with the UK's Takeover Code, Vodafone is required to make a final statement on the issue by the close of business on March 13.
Meanwhile, France Telecom is in talks to increase its stake in Mobinil, which it runs as a joint venture with local telecoms magnate Naguib Sawiris. Sawiris is reported to be planning to sell a 20% direct stake to his partner, while retaining a small interest in Mobinil Telecom, the holding firm which controls the Mobinil cellco.
Currently, France Telecom owns 71% of that holding company, which in turn has 51% of Mobinil. It could gain over 90%, boosting its presence in the Africa/Middle East region which is the key focus of its international expansion drive. Mobinil is the largest operator in Egypt, chased by Vodafone, and has a market value of about $2.3bn. One of FT CEO Stephane Richard's first acts when he took the helm in 2010 was to end an ownership dispute with Sawiris, in a deal which gave the latter options to sell his stake to his French partner.
"France Telecom has been looking to expand in the region for a while and striking a deal now may mean a cheaper price than if they were to wait," Amr El-Alfy of Cairo-based Commercial International Brokerage told Bloomberg, referring to the current political unrest in Egypt. The firms are not commenting but a joint statement is expected today.
In the past two years, FT has made deals to enter or expand in Morocco, Iraq and Democratic Republic of Congo and has its eyes on other units in the region. Richard has set a target of doubling revenue from emerging markets by 2015 to about $9bn. The operator's other main Middle Eastern units are in Jordan, Tunisia and Bahrain.
