Cable & Wireless Share Discussion Threads

[plastow] 09/5/2012 09:05

The deal is structured as a scheme of arrangement, under which C&WW effectively cancels its own share capital and reissues new shares to Vodafone. It requires shareholder approval and the sanction of the High Court in order to do this.
"Shareholder approval" means that 75 per cent of the votes cast at an shareholder meeting - not 75 per cent of the total - must be in favour of the deal. That could easily mean the takeover gets through even if only a minority of shareholders actually vote for it. But since Vodafone is paying almost twice CWW's share price before news of the approach emerged, there's unlikely to be much opposition. The court approval is usually a formality.
The odds are in VOD's favour,,,

[rogermauricesmith] 09/5/2012 09:03

Plastow

Reading your piece it's clear we mustn't forget that 56%/58% of the shares are still in neutral hands and have made no decision whether to accept 38p or not. Looking at it coldly they are not going to do so and are somehow going to find a way to squeeze Vodafone to sweeten the terms.
Vodafone and UBS have undoubtedly been frightening the market by saying they will walk away if pressured. But that has to be bluff. Every day that passes it is clear that the assets that CW has under the ground in Britain is what this bid is about. And clearer and clearer just how big a prize those assets are to a new owner.
BT, for one, must be itching to find a way into this but of course Ofcom and a host of other quangos would not allow it.
Sorry BOIX but Vodafone is not going to walk and is likely to sweeten the terms. The share price must move closer to the offer price and it seems that that process has started already after last week's lunacy.

[targatarga] 09/5/2012 08:52

Perky this morning. Feels like the pendulum is swinging the right way again... imho

[dickbush] 09/5/2012 08:32

Wireless Chiefs Plead For More Data Capacity

Today : Wednesday 9 May 2012

Wireless company chiefs used a major industry conference to prod regulators to free up more airwaves to help relieve what they describe as a crippling data capacity crunch.

Executives from Verizon Wireless and T-Mobile USA said the future of data use, such as streaming video and photos, is at risk if more airwaves, or spectrum, aren't put to use.

Verizon Wireless Chief Executive Dan Mead, speaking at the CTIA conference in New Orleans, said the largest carrier will be maxed out in some markets as early as next year and most others by 2015.

The carrier is seeking regulatory authority to buy $3.9 billion worth of spectrum from a group of cable companies. "We will put this spectrum to use quickly," he said.

For T-Mobile's part, "we require more spectrum, more technologies to manage capacity," said CEO Philipp Humm. The carrier had hoped to be bought by AT&T Inc. (T) last year as part of a $39 billion bid that was ultimately stopped by regulators. Humm said average monthly data use on T-Mobile's network has risen more than five-fold over the past two years.

[plastow] 09/5/2012 08:29

scheme of arrangement".

[rogermauricesmith] 09/5/2012 00:02

There was an interesting article in BusinessWeek magazine in the past month about an experiment in Kansas (USA) by Google. Basically Google is wiring up Kansas by stringing fibre optic cable above ground to every house via the existing utility poles. Apparently this has not been done before as the route to a home is usually traditional copper cable which obviously slows down broadband even to those connected via fibre.
Apparently it means that 20 gig broadband becomes 100 gig, meaning a blu-ray movie can be downloaded in five seconds as opposed to six minutes. It's possible I may have got my mbs and my gbs mixed up and some noughts in the wrong place but you get my drift.
The whole telecoms industry is obviously watching this experiment closely. If it works there will be a frenzy to connect homes by fibre and reap the rewards of massively increased broadband fees. Apparently supplying broadband services is now the most profitable thing that telcos do. They say that Sky and Virgin are making more money selling broadband than their TV services.
It has suddenly struck me that Vodafone's bid for CW might be linked to what is going on in Kansas. The strength of CW is that it has a fibre optic network that links most key cities in the UK. Currently it is of most use to business customers and that is CW's main thrust. But if that network was switched to consumers then it could open up a bonanza for whoever owns it.
Of course, Vodafone is consumer oriented and CW is not. If Vodafone can deploy CW's cable network to link a consumer service that delivers fibre straight to the home, then think of the profit possibilities.
I think Vodafone may have been misleading people about what its true intentions are and that it may want CW for a new consumer service delivering fast broadband to compete with BT.
BOIX, the above may be fanciful, but the 20,500 kilometres of fibre optic cable that CW owns (that links up British cities) is an extremely valuable asset. This is why Vodafone will not walk away from its 38p bid quite as easily as you think it might. That's why the CW share price at current levels is not a gamble and is actually a great opportunity.

[djwr100] 08/5/2012 17:45

Please explain how 'minority shareholders' and 'take over' can apply at the same time.

Surely, either they buy some shares and have some control, as a shareholder, or they take over, and buy out all shareholders.

[rogermauricesmith] 08/5/2012 16:43

This is a small extract of a piece was posted on a specialist telecoms site

Two-part takeover strategy
Vodafone plans to take a two-stage approach to the acquisition, initially keeping CWW separate and investing to "stabilise" parts of its business under the leadership of an unnamed senior Vodafone executive.
The firm will then carry out a full integration and merge management teams, eventually rebranding all CWW operations as Vodafone.

The above indicates that Vodafone plans to keep CW separate to start with and also indicates it may have anticipated there being a minority rump of shareholders and that it may not care if there is.

[thehairydagger] 08/5/2012 16:38

steve, init to winit.

[uxb_steve] 08/5/2012 16:36

Added this afternoon. Might live to regret it!

[loganair] 08/5/2012 15:56

Vodafone CWW deal hits potential road block

Vodafone's agreed £1 billion takeover offer for Cable & Wireless Worldwide (CWW) will fundamentally change the face of UK telecoms if it goes ahead. Hurdles remain, more of which later, but Vodafone is now the only bidder in town after India's Tata Communications was forced to wave 'ta-ta' after failing to come up with an acceptable price. Tata is rumoured to have offered only 25p per share for CWW, whereas Vodafone has tabled what it described as a final offer of 38p per share.

The benefits of the deal for Vodafone are more obvious, which is why Vodafone chief executive Vittorio Colao can afford to pay more. It's his most significant acquisition since he took the role four years ago. Colao said the acquisition would create "a leading integrated player in the enterprise segment of the UK communications market, and brings attractive cost savings to our UK and international operations."

Ian Watt of Enders Analysis said that the impact of the deal, "while gradual, would reverberate for years to come". Watt identified three of the potential benefits for Vodafone: "Selling unified communications services into corporates as a single supplier; using Vodafone distribution assets (such as shops and mass-market telesales) to sell fixed services based on CWW's network to small and medium-sized businesses and rationalising the overlapping sales forces."

Watt said Vodafone apparently has 'hundreds' of corporate sales people in the UK, and CWW has around 1,500, "who are currently targeting the same decision makers in the same corporate customer base".


Vodafone already dominates business mobile telecoms in the UK, with around 40 per cent of small and medium-sized enterprises (SMEs) and between 50 and 70 per cent of corporate and government clients, according to Enders. "So the growth potential is likely more in fixed than mobile, given CWW's market share of roughly 20 per cent in UK corporate/government wireline telecoms and very modest presence in SME," says Watt.

The other benefit for Vodafone UK is the ability to save on so-called "backhaul" costs – the price it pays to other providers to carry traffic between its masts and base stations. At the moment it relies heavily on BT, but it could switch some of that traffic to CWW's underground data network, which stretches to over 20,000km in the UK alone.

Analysts say the savings here are likely to be helpful but modest. They also point out that there would be a difficult period of integration during which BT and Virgin Media, which is focusing heavily on business customers, could actually benefit. Enders noted the disruption that went on after CWW bought business telecoms rival Energis, when the merged entity lost a lot of customers.

But another potential plus for Vodafone is the tax losses that CWW has racked up over the years, which it might be able to make use of. Colao was cagey about that however, and it can take years to try and use tax losses, often with limited success. Right now Colao's focus is on getting the bid over the line. Vodafone and its advisors, UBS, Citigroup and JPMorgan Chase, have set the hurdle high because they are structuring the offer as a so-called "scheme of arrangement".

That basically means the company needs approval from 75 per cent of voting shareholders, as opposed to the 50 plus per cent normally required under a takeover. Colao has already won the support of shareholders speaking for about 18 per cent of the shares but he's hit an unexpected hurdle in the form of CWW's biggest shareholder, Orbis Investment Management.

Orbis holds more than 19 per cent of the shares, so it could effectively block the deal. Orbis says it is not happy with the offer price.


That's because the CWW share price remains well below the price at which it was demerged from its sister operation Cable & Wireless Communications, which operates in several former UK colonies, back in March 2010. Orbis held 6.8 per cent of the share back then and has increased its holding at an average of 53p per share over the past two years, according to reports based on banking sources.

Orbis would almost certainly realise some painful losses if the 38p per share offer is successful, so it's no wonder it is hoping for more money. It pointed out that "the proposed deal is clearly attractive for Vodafone shareholders", but said it was "concerned that the offer price does not appear to reflect the value inherent in CWW".

"Although we believe the CWW management team has handled the bid process responsibly, we have declined to give an irrevocable undertaking or letter of intent to support the transaction," Orbis said in a statement. Whether the fund manager really digs its heels in remains to be seen. If Vodafone walks away, the share price will tank and Orbis may face a long wait before the share price recovers to its current level.

One thing is for sure, if the bid is successful former Vodafone UK chief Gavin Darby, who now runs CWW, stands to make more than £1 million for just five months' work.

[djwr100] 08/5/2012 12:57

Not sure I understand..

If vodafone buy what they can, and deal with minority shareholders, does that mean they can't force small shareholders to sell?

If so, CW is then owned by a group of shareholders, including vodafone who have a lot. That simply means they have a bigger say in managing the company than at present, doesn't it?

Won't that imply a better run company, as they will want value for the shareholders in general, or could they use their control to run down CW and make vodafone better? Isn't that a conflict of interest, is it legal?

[rogermauricesmith] 08/5/2012 12:18

Hi Mike

I'd go as far saying it is a cast-iron certainty that Vodafone won't get 75% at 38p. The price is too cheap. But how many takeovers do you know where the first price offered was the final price ended at. Have there been any?

I think the certainty is that Vodafone will not walk away. It has three options that I will suggest again at the risk of attracting BOIX's ire. It can change the offer to a traditional takeover, it can allow CW to pay a last special dividend or it can simply put up with some minority shareholders and deal with them (very easily)later. The last option might be quite useful in making full use of the tax losses as CW would still have a measure of independence.

[aleks_atanasov] 08/5/2012 11:58

plus generally speaking if the scheme fails, then VOD can make an general cash offer requiring only 50% acceptance and under certain circumstances they can buy 29.9% stake and so need only 20% acceptance.

if you ask me the risk is, Orbis could get vocal again and then you will have those fools who bought at the 6m Hi dumping stock.

[djwr100] 08/5/2012 11:43

But if they walk away they leave a valuable company with assets that could be managed well. There have been arguments showing the value of the company..it's not about the value vodafone give it, it's about its assets and the cost of replacement, in some cases.

The price is what it is because it is being managed there, say many.

[mikepompeyfan] 08/5/2012 11:37

Roger, logically the price should not be what it is if there was no risk involved.
Is there not a risk vod won't get the 75% they want and end up walking away ?

[solomon9] 08/5/2012 10:38

Good news with the KPN/ Carlos Slim deal- Slim is buying Europe telco could be interested in C&W and buy it out of small change.

Slim is famous for buying at the bottom.

[rogermauricesmith] 08/5/2012 09:34

Mikepompey

I have to say I find the word "gamble" amazing being used in relation to this share.

There is a firm 38p offer on the table.

You have bought shares at 33.2p.

Gamble???

Has everyone gone mad?

[thehairydagger] 08/5/2012 09:23

SP marked up after days of drops and peeps sell, seen it all before, i'm buying more.

[mikepompeyfan] 08/5/2012 09:18

Couldn't resist the gamble. Bought some at 33.2 .

[aleks_atanasov] 08/5/2012 08:58

"mms playing games" - more likely stupid holders selling. But hey thats why we have the market to transfer the cash from fools to the worthy.

[plastow] 08/5/2012 08:52

from the lse board ,theres no big sellers just the mms playing games trying to shake us small holders G.L




Heres a list of the current major holders. I notice that in fact Deutsche Bank has been added to the list so this is a REAL new 4.76% holding of CWW shares. I also notice that the rest of the big holders on the list are still cuddling their shares so I cant think where the heck Deutsche bank manged to scoop up 130 million shares out of the market without anybody noticing and without the price going up and without making any declaration on form 8.5 or form 8.3

Orbis Holdings Ltd 525,591,674 shares 19.15 %

Sky Investment Counsel Inc 191,623,563 shares 6.98 %

RBC Global Asset Management Inc 182,483,339 shares 6.65 %

Credit Suisse Group AG 140,811,456 shares 5.22 %

JPMorgan Asset Management 132,080,868shares 4.81 %

Deutsche Bank AG 130,692,020 shares 4.76 %

Cyrte Investments BV 107,083,460 shares 3.90 %

Investec Asset Management 101,048,388 shares 3.68%

Legal & General Investment Management 98,445,125shares 3.58 %

GAM (UK) Ltd 96,137,638 shares 3.50 %

Marathon Asset Management LLP 84,626,617 shares 3.08 %