Private equity groups seem to be extremely busy running their rulers over European telco assets. After all the industry is ripe for consolidation as we keep stating here at TechBoard. But, today we had an interesting jab from Cable & Wirelss stating that because of their lack lustre share price over the last few months, they believe that they must now be a private equity target.
It seems that their management might even be happier running C&W as a private company rather than having to put up with the vagaries of the market - have they ever worked with private equity outfits?
And perhaps they are dodging the real issue which is that even though C&W has made real progress under Caio and Lapthorne, it is still largely a fixed line voice company that is a little behind the broadband curve. I'm not sure that the acquisition of Energis really changes this. And investors have gone more sour on fixed line only telco's.
The part of the business that really makes money is their Carribean franchise. Which is nice if you like the sun, but probably a little far removed for their investors to get too excited about.
So where should C&W go? Well, its probably a little too late for them to try and get into the faster growing mobile game - so their only option other than getting bought out now is to batter down the hatchets, ignore their share price and keep focusing on being a strong broadband provider in their markets as well as providing corporate telco services.
This doesn't sound very sexy and its going to be tough hanging in their while they wait to upgrade their networks, but broadband is the future and they have a sensible balance sheet. Plus, the list of companies leaving the UK voice market just keeps growing. They could thrive just by being a survivor. At least their a stronger number 2 to BT again?! Oh, and both BT and C&W must be kicking themselves for not having any real mobile assets today. Wi-Fi's their only hope now.
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