Monday, April 23, 2012

Vodafone snaps up Cable & Wireless

Vodafone looks to have succeeded in its ambition to buy up commercial network provider Cable & Wireless for a projected £1.04 billion ($1.76 billion), or about 40% of the estimated break up value of the company.

Assuming it is successful, Vodafone will gain; a national fibre-optic broadband network that is separate from BT or Virgin Media's), a massive portfolio of business customers and a global backbone infrastructure that reaches out to over 160 countries via its network of undersea cables. 

Suggestions are that the latter will probably be sold off so that Vodafone can concentrate on winning more enterprise customers at home, which is probably what they will do.  Though as a long term play, especially if they are interested in servicing large enterprise customers, I think that would be as strategically unwise as the BT forced sale of its mobile phone business...

C&W has a lot of customers but not as many as you might think, remember they have been in serious decline for over 10 years, I rather consider them to be the GEC/Marconi of the UK Telecoms Industry, the parallels are clear.

The real coup with this acquisition is not the customers or the international fibre, it is that UK national fibre infrastructure that they will take possession of as the deal completes.   Since 2010 when the use of smart phones and mobile devices saw the cellular data traffic move ahead of voice the one the largest cost-of-service-delivery items has been the amount of money that Vodafone has had to pay to BT for backhaul, and from here on in the Vodafone will benefit from the coming explosion in mobile (I don;t think mobile is even ouf the gate yet...)

Bottom line. Buying up C&W gives Vodafone its own infrastructure the reduction in backhaul costs will dramatically improve its revenue per user with all the potential advantages that this brings forth customers and investors.

Thursday, April 19, 2012

TATA leaves C&W Worldwide a sinking ship

Tata Communications 11th hour withdrawal from negotiations with Cable & Wireless Worldwide sent the troubled companies shares into free-fall yesterday and left the way clear for Vodafone to snap up a bit of a bargain.

The estimated breakup value of Cable & Wireless is estimated to be around £2 1/2 billion, approximately £.90 per share. This may have led to the Cable & Wireless board to reject the £.42 a share offer made by Tata.  With CW shares standing at £.31 each as I type this, you wonder if they've gained anything.

Over the years of watching the ups and downs and further downs of Cable & Wireless it's often occur to be and my colleagues at Cable & Wireless would be a better fit with British Telecom supporting their increasingly successful BT Global Services organisation.

Here is an interesting if not terribly well-informed article posted on interactive investor on the 16th which goes into rather more details. The comment that Cable & Wireless is the provider of choice for 70 of the FTSE 100 companies is terribly wide of the mark, after years of decline Cable & Wireless is left as one of the many, many, many, providers that service the U.K.'s largest companies.  Don't believe the PR spin Cable & Wireless's position amongst these organisations is way behind that of BT Group and Verizon.

Wednesday, April 18, 2012

GMail fail should act as Cloud Warning

It was as recently as November 2011 that RIMs Blackberry server farms were unable to supply e-mail services to millions of customers for days, to the great delight of Starbucks customers and commuters worldwide…

Gmails short outage this week has caused quite a long conservation amongst users and the world's press. The system was out for about an hour and seems to affected about 10% of users. In the grand scheme of things this outage is not really significant and I wonder how many users put it down to failures at their ISP or if they were mobile ‘just another coverage failure’.

But once again this minor Gmail failure is a reminder that cloud-based services and applications are out of control of their users.