Cable & Wireless (C&W) is reported to be courting support from France Telecom and Deutsche Telekom for a planned bid for US telco Sprint. The two European giants each hold a 10 per cent stake in Sprint, via their three-way joint venture, Global One. C&W is reported to be seeking to buy the other 80 per cent.
Cable & Wireless - whose cable arm, Cable & Wireless Communications, is being eyed by Deutsche Telekom (see separate story) - is looking to acquire the 80 per cent of Sprint that is publicly held, according to US reports. C&W is believed to have held talks with France Telecom and to be seeking similar meetings with Deutsche Telekom. Such talks will be vital to the progress of a bid as last year, the French company was believed to have met investment banks with a view to increasing both telcos' shares in Sprint.
The bid was met with surprise by analysts. Ovum's senior telecomms consultant, Josie Sephton, said the move would be an ?audacious? one by C&W. ?The fact that it is not looking to merge but mount a takeover. However this would put them firmly in the US market.? It would also present serious competition to the proposed merger of MCI and BT, which put paid to BT's own joint venture with Sprint.
A combined company would boasts annual revenues of $23 billion and around 90,000 staff.
Cable & Wireless would benefit from Sprint?s position as the third biggest long distance supplier in the US after AT&T and MCI, as well as its stake in Global One, which already boasts 30,000 business customers since its launch in February 1996.
Sprint and Global One would gain C&W's strong position in Asia Pacific, an area where BT and MCI are particularly weak. They would also benefit from Cable & Wireless Communications, the biggest cable force in the UK.
However, there are questions over financing. A bid would need to be in the region of $15 billion. France Telekom and Deutsche Telecom paid a combined price of $3.7 billion for their two 10 per cent stakes in Sprint.
There are also questions over who would lead the new group, and which brand image to adopt. According to market research by Sprint in the US, unaided recognition of Sprint has increased from 44 per cent to 82 per cent.
Sephton said the move would be more significant in giving C&W a bigger foothold in the US, where it lacks significant presence, than in providing a way into the Global One alliance, which it has been expected to join anyway. Before Christmas C&W was rumoured to be talking to US Baby Bell operator Nynex about a possible tie-up, but Nynex is now expected to pull out of the UK telecomms market.
?The move will give people a different impression of Cable & Wireless. It wants to be seen as an aggressive player,? said Sephton.
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