Cables, not tax, would justify a deal

 
Marion Dakers
AS THE Greek government has discovered in recent weeks, a 50 per cent haircut is a tricky thing to foist upon investors.

Vodafone’s tax boffins will by now have been through CWW’s assets with a fine tooth comb to figure out how many of its benefits will remain useable following a takeover.

If Espirito Santo’s number-crunching is correct, Vodafone could realistically gain a maximum of £430m from loss-making CWW’s near-£1bn UK tax assets, taking into account a loss of goodwill and political standing if the group was to delve again into the legal but sometimes cloudy sphere of tax efficiency.

Would such a controversial agreement be worth it? Analysts have argued that cash-rich Vodafone could do with a takeover deal, and some have put a value of almost £2bn on CWW’s operations and possible synergies – much more valuable than its tax breaks.

CWW owns the UK’s largest cable network, reaching 20,500km in length. Its roster of corporate and government contracts would also be a buffer against the ups and downs of consumer mobile contracts. It’s these physical assets that Vodafone should pay closest attention to – not its cut-value tax allowances.