C&W chairman confirms Energis talks

25 Jul 2005

The chairman of Cable & Wireless (C&W) has confirmed that his company is in talks to acquire fellow UK telecoms player Energis. Both companies have a considerable presence in the Irish marketplace, with Energis claiming to be the third largest telecoms operator in Ireland.

“We remain active in the area of corporate development and we are approaching the stakeholders of Energis concerning a possible acquisition. We cannot be certain that a transaction will result and a further announcement will be made in due course,” said C&W chairman Richard Lapthorne.

Observers say C&W, one of the world’s leading communications firms, is aiming to buy Energis for around £700m sterling (around €1bn).

C&W is expected to use part of its £1.34bn sterling cash hoard to finance any deal. The 134-year-old communications empire, which once spanned Europe, Hong Kong and the US, has been tipped as both a bid target and a predator in the UK because of this cash pile. In February the company rejected takeover overtures from Hong Kong carrier PCCW.

Following the telecoms downturn in 2002, C&W narrowly avoided running out of cash by committing to a radical overhaul of its business, pulling out of loss-making businesses and cutting 3,500 jobs before returning to profitability last year.

For the financial year ended 31 March, 2005, C&W recorded a total revenue of £3bn sterling, down from £3.1bn sterling reported last year. However, the company still managed to yield profits and increase capital expenditure to £332m sterling from £326m sterling last year as well as recommending a full-year dividend of 3.8 pence per share, on top of a previous £1.16 sterling payout, representing a 21pc increase in the total dividend.

In the Irish marketplace, C&W boasts a considerable data-networking business and claims global connectivity through connections to its parent company’s globe straddling network. In recent weeks its local operations introduced voice services to the SME and corporate market and signalled possible mobile virtual network operator market strategies.

In the UK, Lapthorne said the company is pushing ahead with local loop unbundling and acquisition strategies and said mobile was top of the agenda for many of its national operators worldwide. “We continue to develop our mobile and broadband services across the national telcos, while at the same time reviewing our cost base. In the Caribbean we are rolling out shared-service platforms to provide standardised billing, procurement and supply chain management, as well as centralised regulatory and other support functions across the region. We continue to explore opportunities to extend these initiatives to other national telcos.”

In June, however, Energis’ Irish operations reported a flat year with revenues standing at €43m, due to narrowband internet customers migrating to broadband faster than the company had anticipated. Its parent company in the UK reported a £25m sterling (€37m) drop in its overall sales to £745m sterling in the year.

By John Kennedy