Digicel rival C&W says Liberty deal would add clout

Cable & Wireless yesterday said a deal with billionaire John Malone’s Liberty Global would help both companies add scale in a high-growth, low-penetration region for smartphones and broadband connections.

The company, which has assets in Latin America and the Caribbean, last month announced it is in talks to be acquired by Liberty Global. Cable & Wireless is seeking more than $5.5bn (€5.03bn) to strike a deal, people familiar with the discussions have said.

Denis O’Brien’s Digicel telecoms firm has identified Cable & Wireless as its key competitor in its main Caribbean markets. It may face increased competition in the Caribbean if Liberty — which also owns UPC-Virgin Media and TV3 here — were to buy Cable & Wireless.

Mr O’Brien unexpectedly last month cancelled plans to raise $2bn in an IPO.

“This is a scale world and a scale business and in terms of scale, they’re $18bn in revenue and we’re $2.5bn, so size matters,” chief executive Phil Bentley said in an interview yesterday.

He declined to comment on the status of the talks with Liberty or when an announcement might be made.

Mr Bentley is working to expand the business in high-growth markets in Latin America and the Caribbean and is halfway through a three-year plan to improve the company’s network.

It’s adding content, signing a deal to broadcast English Premier League soccer games for two seasons starting next year in 32 countries in the Caribbean on its new sports network, Flow Sports.

In March, the company completed the acquisition of Columbus International, adding high-speed internet and TV networks across the island chain and Central America. Talks with Liberty Global aside, the company is looking at ways to expand in South America and has started to expand in South America, Mr Bentley said.

Cable & Wireless is also updating its broadband infrastructure, replacing slower copper networks with high-speed fibre, he said.

“We’re much more under-penetrated in that region. If you take broadband, our broadband penetration in the Caribbean is 36%. In Europe it would be 80%,” Mr Bentley said

The company reported earnings before interest, taxes, depreciation and amortisation of $427m for the six months ended September, beating the $413m average estimate of three analysts. Cable & Wireless also raised its cost-savings target to $125m from $85m.

Cable & Wireless shares have risen 29% since October 21, the day before it disclosed the talks with Liberty.