France Télécom scotches C&W takeover rumour

20 Jun 2005

France Télécom (FT) has reacted quickly to scotch a report in yesterday’s Sunday Telegraph, that claims it is preparing to launch a GBP4 billion bid for UK alternative telco Cable & Wireless (C&W). A spokesman for the French heavyweight dismissed the article in the UK newspaper as ‘pure fantasy’, following claims that it was looking to consolidate its UK assets, including its mobile operation Orange, and merge its internet division Wanadoo with C&W’s Bulldog unit. The Sunday Telegraph said the tie-up would give FT access to the UK’s second largest telecoms network behind BT Group; would help it create synergies with its mobile operations; and would give it greater access to the lucrative business segment. FT’s strident denial is not surprising given that it has already pledged to limit its spending on acquisitions to EUR500 million (GBP33.9 million) this year. The French company’s chief financial officer Michel Combes was believed to be the driving force behind the buyout plan.

This is the second time that the UK-based telecommunications group has been the subject of a possible takeover. In May rumours abounded that C&W was in the spotlight, although experts dismissed the possibility of any takeover on the grounds that a potential buyer could struggle to negotiate C&W’s government licences. Nonetheless, C&W’s shares have climbed by 22% since the stories first emerged two months ago suggesting that investors are preparing for a bid.

France, United Kingdom, Orange Group