Voda gets green light for CWW purchase

The European Commission on Tuesday cleared the proposed acquisition of Cable & Wireless Worldwide by Vodafone Group clearing away the final hurdle for the deal to go ahead.

The Commission concluded that the transaction would raise no competition concerns, as the companies’ activities are largely complementary. “CWW’s main activity is related to fixed telecoms, whereas Vodafone is mainly active in mobile telecoms,” the EC said.

Although Vodafone and CWW’s activities overlap in a number of markets such as in the fixed and mobile markets in the UK, the Commission found that the impact of the transaction on these markets is likely to be small as the combined entity would continue to face significant competition.

“Vodafone would be able to use the assets of CWW in delivering fixed-mobile combined services to end-users. However, the Commission’s investigation showed that the parties would not be able to shut out fixed or mobile operators from the markets for combined fixed-mobile services, because of the parties’ lack of sufficient market power. Operators sell bundled fixed and mobile services via fixed or mobile resale agreements or partnerships and will still be able to do so in the future,” the Commission said.

“Moreover, joint purchasing of mobile and fixed as one package has been the exception, rather than the rule, up to now. Finally, telecoms regulators have the possibility to, and also do intervene in some of the markets concerned and can therefore constrain the merged entity,” the authority added.

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’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 since backed down and now believes that the bid will eventually succeed, even if Orbis were to vote against it.