Vodafone closes in on CWW purchase; buys back shares

Vodafone Group’s potential takeover of Cable and Wireless Worldwide (CWW) is a step closer to being accepted after a major shareholder withdrew its objection to the deal.

The operator group’s £1.04bn bid was in doubt of being accepted after investment group Orbis, which owns 19 per cent of CWW, voiced its opposition to the takeover. However, the firm has  backed down and now believes that the bid will eventually succeed, even if Orbis were to vote against it.

“In these circumstances, our opposition would only serve to prolong the process because the Company would likely adjourn today’s meetings to secure the necessary votes,” the firm said.

“This is not in the interests of any CWW stakeholder. Accordingly, Orbis intends to vote in favour of the scheme.”

CWW’s fibre network covers 56 per cent of the UK population and the firm’s international cable network stretches to more than 150 countries, either directly or indirectly through its business partners.

Vodafone will be able to use CWW’s network for its backhaul, for which it currently relies on BT, when the deal is finalised. The company reportedly pays BT in the region of £200m a year to lease fixed telecoms lines, but its deal with CWW would alleviate this dependency. Vodafone said that this was a major factor in its decision to bid for CWW, claiming that its network can provide backhaul of data at “considerably lower cost compared to prevailing market rates for leased capacity.”

The operator group also announced that it has bought 9.3 million of its own shares back on the London Stock Exchange. The shares were bought via Citigroup at prices between 174.75 pence and 172.85 pence which it will hold in treasury. Since June 20, Vodafone has now purchased 2.1 billion of its own shares at a total price of £3.57bn.