Deutsche Telekom is reported to be in negotiations to buy a chunk of Cable & Wireless Communications (C&WC).
The German telecomms operator, which controls the largest market in Europe, has been widely tipped to purchase a stake in a significant UK player for a while but has been distracted by its flotation and debt.
Now it is reported to be considering a #750 million bid for Bell Cablemedia?s 14 per cent stake in C&WC, formed from the merger of UK cable operations by three telecomms giants last October. However, the stake on offer could become far larger - Bell Canada, Bell Cablemedia?s parent, is believed to be withdrawing from the UK telecomms market, and so too is Nynex, which is merging with fellow US telco Bell Atlantic.
C&WC is an attractive partner for the German giant since its largest shareholder, Cable & Wireless, pulled out of its proposed joint venture with Deutsche Telekom?s German rivals Veba and RWE earlier in the year. This withdrawal was thought to be in preparation for a bid to join Global One, the alliance between Deutsche Telekom, Sprint and France Telecom.
The entry by Deutsche Telekom into C&WC could ease Cable & Wireless? inclusion in Global One and pave the way for equity shares in C&WC to be bought by the other Global One partners. C&W is attractive because of its presence in the Asia Pacific region and in return, the move would significantly strengthen C&W, which is seen as far weaker in Europe than BT/MCI and Global One. It is known to be looking to strengthen its position in France and to find partner in Italy.
Deutsche Telekom would benefit from the deal by gaining direct access to customers using cable instead of having to pay BT local access charges. It would also gain a foothold in the lucrative UK market. C&WC was formed in October between the cable affiliates of telecomms giants Cable & Wireless, Nynex and Bell Canada. In the fold are Nynex Cablecomms, Bell Cablemedia, Videotron and Cable & Wireless subsidiary, Mercury Communications.
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