Early thoughts: proposed takeover of Cable & Wireless by Liberty Global

Based on confirmation that Liberty Global and Cable & Wireless are in takeover talks, here are some early thoughts should the sale be confirmed.


With the dust not yet settled on the sale of Columbus international to Cable & Wireless Communications plc (CWC), earlier this year, many of us across the region were taken aback by the CWC announcement last week that it had been approached for takeover by global telecoms and television firm, Liberty Global Inc (Source:
CWC). Apart from confirming that they are in discussions, the parties themselves have been tight-lipped about their engagement, but cited that by 19 November 2015, another statement would be made as to whether Liberty Global has “a firm intention to make an offer for CWC” (Source:  Liberty Global).

The contenders…

Headquartered in London, Liberty Global Inc. is major player in the international telecoms/ICT space, which focuses on television and broadband Internet services. It operates in 14 countries, 12 in Europe, along with Puerto Rico and Australia, and serving over 27 million customers. As at June 2015, the firm has over 38,000 employees and generated revenues of USD 18.2 billion (Source: Liberty Global).

On the other hand, although CWC has a presence in fourteen countries in the Caribbean, along with Panama, Monaco and Seychelles, it is a considerably smaller firm than Liberty Global. It serves 5.2 million customers, generated revenues of USD 1.9 billion, with around 3,970 employees (Source:  CWC).

Some concerns and reservations…

As persons based in the Caribbean would be painfully aware, the teething pains associated with the ongoing consolidation of Columbus and CWC operations in the region have been extensive. Complaints have been rampant regarding service quality, as well as the recently announce price hike that is likely to take effect in several countries. In the midst of all of this, there is now talk of a possible takeover.

Although it must be emphasised that neither CWC nor Liberty Global has announced that a takeover is imminent, the fact that both parties (to date) are still in discussions on that matter means that it is still possible. It is thus in that light that the following initial reservations are being expressed:

  • An unknown entity: As it currently stands, Liberty Global does not have a presence in any of the countries that would be affected by the takeover, and besides Puerto Rico, has no other presence in the Americas. Whilst acquiring CWC might be a feather in its cap, so far there is no indication of the extent to which Liberty Global might be committed to the Caribbean, or whether we are just pawns is considerably bigger game.

Further, an based on past experience, when AT&T Wireless Service in the United States sold their operations to Cingular in the early 2000s, operations in a number of Caribbean countries also changed hands. However, in less than two years, and having no strategy for the region, Cingular sold its Caribbean operations to Digicel.

  • Landscape is still in transition:  As mentioned earlier, the region – the companies involved, other players in the market, consumers, policymakers, regulators, to name a few – is still grappling with the CWC’s takeover of Columbus International. Another takeover when the industry is still in transition will be very unsettling, could exacerbate already testy and contentions situations that have not yet been favourably settled.
  • Regulatory limitations: As discussed in the recently published, Why is the Caribbean plagued with flat-footed telecoms regulation?, the telecoms/ICT regulatory frameworks across the region are highly deficient. They have been grappling with the implications of the sale Columbus International to CWC, and have been shown to be ill-equipped to manage that situation. Should Liberty Global’s takeover of CWC eventuate, confidence in the regulatory machinery to ensure that the region’s interests are adequately protected is likely to be even further eroded.

Although Liberty Global and CWC are currently in takeover talks, which could fall through, it ought to be noted that earlier this year and in an interview with the UK Telegraph, CWC Chief Executive Officer, Phil Bentley, expressed the view that CWC could be a takeover target:

The way I look at it, there are regional players and global players. We’re not a global player anymore. We’ve got into a position of strength to be the regional powerhouse which is good but we’ll never be a global player. We’re a big fish in our little Caribbean sea.

“But around us now we’ve got the big players. You’ve got AT&T investing in TV in Mexico, you’ve got Carlos Slim and Telefonica. Altice are hoovering up anything that goes.

“We can’t run the business looking over our shoulder. We’ve got to just play our game in the region and if one of the global players comes knocking on our door, then so be it. If someone then puts enough money on the table then so be it. Nobody is immune from takeover interest.

Hence it could be just a matter of time before CWC being taken over by another firm, and we, in the Caribbean, would just have to deal with it.

 

Image credit:  Gerard Stolk (flickr)

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