From Caribbean360

LONDON, United Kingdom, Thursday November 6, 2014, CMC – Telecommunications giant Cable & Wireless Communications (CWC) fell by 8 per cent after issuing shares to pay for a US$1.85 billion Caribbean deal.

The company is buying privately owned Columbus International, a fibre-based telecoms company serving the Caribbean, Central America and Andean region, which is backed by cable television billionaire John Malone.

CWC is funding the deal by paying US$707.5m in cash, issuing 1.5 billion new shares to the vendors and placing shares worth nearly 10 percent of the company to help fund the cash element.

“If all goes to plan Malone will end up with around 13 percent of the company,” the Guardian said.

CWC said the deal would help expand its presence in the region, adding Columbus’ 700,000 residential customers.

“This is a transaction that transforms CWC, providing a step change in growth and returns,” said CWC chief executive Phil Bentley. “Columbus offers complementary TV, broadband and B2B capabilities in complementary markets.”

CWC also said first half revenues rose 1 per cent to US $848m and core earnings climbed 5 per cent to US$277m.

“Acquiring Columbus should allow CWC to reach the endgame that Marlin [its investment programme] was intended to deliver faster and with less execution risk,” analyst Jerry Dellis told the Guardian newspaper. “It also leaves a more duopoly market structure across CWC’s footprint, eliminating the competitive risk that would have remained had Columbus remained as a (strong) rival.

“We think Columbus accelerates the delivery of CWC’s strategic aims and should create better long-term market structures,” he added.

Columbus has about 700,000 residential customers in the Caribbean, Central America and the Andean region.

In the Caribbean, it provides “triple-play” cable TV and broadband services over its fibre network.

Through its wholly owned subsidiary, Columbus Networks, Columbus provides connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region.

For more on this story go to: http://www.caribbean360.com/business/cable-wireless-shares-plunge-following-annoucement-it-will-buy-columbus#ixzz3IIokHmDF

Related story:

Cable & Wireless Communications in big bet with $3bn acquisition

By Daniel Thomas, Telecoms Correspondent from Financial Times

Cable & Wireless Communications will double the size of its business after agreeing to buy a Caribbean and Central American telecoms group backed by John Malone for about $3bn.

The British telecoms group has agreed terms to purchase Columbus International, a privately owned telecoms and technology services provider in the Caribbean, Central America and the Andean region.

Cable & Wireless Communications will pay $1.9bn for the Barbados-based business, as well as assume about $1.2bn in net debt from Columbus’s balance sheet.

Mr Malone, chairman of US-based Liberty Global and the Caribbean firm’s largest single minority shareholder, will also end up with a large stake in CWC following the deal.

CWC will pay $708m in cash and issue shares to investment vehicles controlled by the two co-founders of Columbus and Mr Malone. The Columbus shareholders will hold about 36 per cent of shares in the larger group following the deal.

CWC will partially fund the transaction with the placement of shares representing close to 10 per cent of outstanding capital.

The move will help CWC grow, the company said, and accelerate progress towards its strategic goals. CWC said the larger group would expect to generate significant operating cost and capital expenditure synergies.

“This is a transaction that transforms CWC, providing a step-change in growth and returns,” said Phil Bentley, CWC’s chief executive.

The transaction will be earnings neutral in the first full year after completion, and “materially earnings enhancing in subsequent years”. CWC’s dividend policy of 4c per share will be maintained.

CWC, which has a market capitalisation of about £1.2bn, has transformed itself over the past few years with a series of sales in non-core countries such as Monaco and Macau to focus on the Caribbean and Latin American regions.

The telecoms operator, which was spun off from Cable and Wireless in 2010, moved its headquarters to Miami last year to reflect the strategic shift.

Columbus has about 700,000 residential customers in the Caribbean, Central America and the Andean region. It generated revenue of $505m in the year ended December 31 2013.

In the Caribbean, it provides “triple-play” cable TV and broadband services over its fibre network. Through its wholly owned subsidiary, Columbus Networks, Columbus provides connectivity to 42 countries in the region, as well as capacity and IT services, corporate data solutions and data centre services throughout the Caribbean, Central America and the Andean region.

IMAGES:

The Cable & Wireless Communications Plc (CWC) company logo is displayed on a computer screen at the company’s headquarters in London, U.K., on Wednesday, May 22, 2013. Tony Rice, chief executive officer of CWC, is reshaping the group to reduce the number of countries within which it operates and to expand the business in the Central American and Caribbean region. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg

Phil Bentley, CWC chief executive

For more on this story go to: http://www.ft.com/cms/s/0/de002b6c-6589-11e4-aba7-00144feabdc0.html#axzz3IIp7MQcN

EDITOR: Cable & Wireless is here in the Cayman Islands as LIME, an acronym for ‘Landline, Internet, Mobile, Entertainment. The company formed from the integrated businesses of Cable & Wireless in the Caribbean that adopted the LIME name on 3 November 2008. LIME operates as the native incumbent telecommunications service providers in many of the islands where they reside – Anguilla, Antigua & Barbuda, Barbados, British Virgin Islands, Cayman Islands, Dominica, Grenada, Jamaica, Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent & the Grenadines and Turks & Caicos in the Caribbean.