CWC acquires Columbus in Caribbean quad-play crusade

UK-headquartered international operator group Cable & Wireless Communications (CWC) has announced it has finalised its acquisition of Barbados-based telco conglomerate Columbus for $1.85 billion. However, the firm admitted it is still waiting for regulatory approval in some of Columbus’s operating markets.

CWC said the purchase will bring significant additions to its business assets in the form of fibre optic submarine backhaul and terrestrial broadband and TV. The company also said the deal will enable it accelerate its multiplay strategy.  “This is a transformational deal for Cable & Wireless Communications, Phil Bentley, CWC CEO said.

“Columbus Communications is an outstanding business; not only do we add significant fibre optic submarine backhaul and terrestrial broadband and TV capability to our leading mobile and legacy copper networks in the Caribbean, but our complementary B2B divisions can now offer geographical focus and a wider product offering in the faster-growing Latin American markets.”

According to the two companies, the deal is in line with global industry trends of convergence, increasing content consumption, and growing demand for higher bandwidth. Columbus said video is also playing ever bigger role in telcos’ network strategies across the world.

“Together, we [CWC and Columbus] will create the best-in-class quad-play offering in the region, delivered on a superior mobile, fibre and subsea network,” Bentley said. “This is a significant opportunity to better serve our customers and improve the ICT infrastructure of the communities in which we operate, whilst accelerating our strategy and delivering materially enhanced returns and synergy benefits.”

Columbus said the acquisition will present new opportunities to both companies and increase focus in Colombia, Guatemala, Costa Rica, Honduras, El Salvador, Dominican Republic, Puerto Rico and Peru.

Columbus CEO Brendan Paddick said: “Together we will form a truly world-class company focused on our customers in the Caribbean, Central American and the Andean regions. The proposed acquisition makes both companies stronger, faster and smarter in competing with their larger competitors.”

Phil Bentley (left) and Brendan Paddick sign the acquisition agreement. (Image source: Columbus)

CWC has set aside $1.5 billion to be invested in improving the newly acquired business across all markets. However, it said it will start releasing the money only in the countries where its Columbus integration plans have so far been approved.

“In a small number of markets where we have yet to receive all the necessary approvals required, we cannot commence our integration and investment plans; we will therefore continue to support the local regulatory due process until we have the green light to move forward in those markets,” Bentley said.

The deal makes sense for CWC. It will more than double itself in size and grow its market share in the Caribbean significantly as it eliminates the competitive challenge Columbus would have posed as a rival. The acquisition will also strengthen the telco’s quad-play offering. It looks like CWC is keen to reinforce its B2B offer as well, as this business was largely divested in 2010 when Vodafone bought the groups’ enterprise arm Cable & Wireless Worldwide.

However, TV, currently accounting to about 2% of the firm’s total revenues, seems to be a key strategic focus for CWC. In its 2014 annual report the company stated it expects to grow its quad-play business by 50% in the next two years through acquiring appropriate platforms. “TV, like mobile, is a ‘moment of truth’ for customers where they express a clear preference for which company they choose to deliver high quality entertainment,” the firm said in the report.