Focus on C&W WW heats up

CABLE & Wireless Worldwide (C&WW) yesterday surged ahead on the London Stock Exchange, buoyed by talk of a potential takeover bid in the offing from Eastern rival Singapore Telecom.

Shares in the telecoms group, demerged earlier this year from the consumer-focused arm Cable & Wireless Communications, bounced to as high as 78p in early trading, easily their highest point since a profit warning in July.

The stock’s buoyancy came after reports suggested that Singapore Telecom has appointed investment bankers in Asia and Europe to investigate a possible bid for the company. C&WW has also recently been subject to speculation over another possible bid from US telecoms giant AT&T.

However, C&WW pared gains on the stock market later yesterday, as analysts remained largely sceptical over the strategic sense of a bid from Singapore Telecom, particularly as the group has limited UK operations.

“We see limited scaleability of the business if Singapore Telecom does acquire C&W, with the majority of its revenues linked to UK-based operations,” said Citigroup’s Arthur Pineda.

Last year, about a quarter of C&WW’s £2.27bn in revenue came from its operations in India, the Middle East, Africa and South East Asia. In July, C&WW investors were rocked by a first quarter update from the group, which admitted that the withdrawal of large quantities of money from UK public sector budgets in the wake of the new government’s emergency Budget would hit trading in the current year. The stock later eased closing down 0.2 per cent at 73.6p.