The sale of Cable and Wireless to Liberty Global has been confirmed. Here are some thoughts in light of this new development.
This past Monday, 16 November, and three days ahead of the deadline by which an announcement needed to be made, both Cable & Wireless Communications plc (CWC) and Liberty Global Inc. announced that the an agreement had been reached for Liberty Global to acquire CWC for approximately £3.5 billion (USD 5.3 billion). The successful completion of the deal requires approval by CWC shareholders; however from the CWC press release, the firm’s Board of Directors is recommending the sale, and the shareholders should receive a more than reasonable return on their investment.
In our article, Early thoughts: proposed takeover of Cable & Wireless by Liberty Global, which was published a few weeks ago, when the parties confirmed that they were indeed in negotiations, we identified some concerns should a deal eventuate. Those are still valid, however, below, now that an agreement has been confirmed, we have a few additional thoughts to share.
1. No more C&W
With a lineage that can be traced back more that 150 years, and a presence in the Caribbean of well over 100 years, “Cable & Wireless” will be no more. The firm will be delisted from the London Stock Exchange, and it is expected that the name, which does elicit powerful emotions across region, will make its way into the history books. Ultimately, the likely disappearance of “Cable & Wireless” does signal – to some degree – that we as a region might be heading into uncharted waters in this ever changing and evolving ICT/telecoms landscape.
2. Liberty Global will have an enviable footprint globally and in the Americas
As stated in our “early thoughts” article, Liberty Global operates in 14 countries, serving over 27 million customers, and generating over USD 18 billion in revenues.When the acquisition is completed, CWC’s Caribbean operations will become part of Liberty Global’s Liberty Latin America and Caribbean Group (“LiLAC Group”), which currently only comprises operations in Puerto Rico and Chile.
On the other hand, CWC has a presence in 16 Caribbean countries: Anguilla, Antigua and Barbuda, Barbados, British Virgin Islands, Cayman Islands, Curaçao, Dominica, Grenada, Jamaica, Montserrat, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, and Turks and Caicos Islands, and serves over six million subscribers. When the sale is completed, Liberty Global’s footprint in the Americas will increase seven-fold and serve a customer base of over 10 million, whilst globally, the firm would have a presence in 30 countries, more than doubling its current footprint.
3. Customers seem incidental to the money
In reading the press releases by both CWC and Liberty Global, it was interesting to note that the focus was solely on the figures, and the fact that a generous offer has been made:
While we remain confident that CWC’s unique and highly attractive business has a substantial long-term growth opportunity ahead of it, we believe the Recommended Offer represents an attractive premium for shareholders and secures earlier delivery of our long-term value potential, hence the Board’s recommendation today…
…Since we launched our new strategy two years ago, CWC has transformed itself into a leading regional quad play operator. The disposal of Monaco, the creation of our regional hub in Miami and the recent acquisition of Columbus accelerated our competitive positioning whilst at the same time generating significant value for shareholders and enhanced service levels for our customers….
…I would like to take this opportunity to thank all the employees of CWC for their hard work to position our company for success, culminating in the substantial shareholder value creation announced today.
We, the customers, are the ones that ultimately will be affected in the long term – good or bad – by the acquisition, however, from their announcements, it appears that the firms really have not considered the customers. As indicated in our “early thoughts” article, the Caribbean is still grappling with the consolidation and teething pains from the sale of Columbus International to CWC, which was only completed this past March. Whilst the sale of CWC to Liberty Global is unlikely to cause much disruption to operations and service on the ground in the region, we will be at the mercy of a new and unknown leadership, whose primary objective, as a publicly traded company, is to ensure that the firm remains increasingly profitable for its shareholders.
Image credit: Andrew Writer (flickr)