Vodafone's potential Cable & Wireless Worldwide acquisition will help the operator boost its fixed enterprise offerings, while also helping it cope with expanding data volume in mobile networks, according to analysts.
On Monday, Vodafone confirmed speculation that it is in the very early stages of evaluating a potential bid for Cable & Wireless Worldwide (CWW).
A Vodafone acquisition of CWW makes very good sense, according to Shaun Collins, CEO at market research company CCS Insight. Enterprise and fixed services are Vodafone's growth engines, and buying CWW would help the operator expand its offerings, he said.
Mark Newman, chief research officer at market research company Informa Telecoms & Media, agrees that a possible deal makes sense: "In the enterprise segment, Vodafone can grow on its own among small and medium-sized businesses, but that is harder to do among large enterprises," he said.
Also, CWW has the highest penetration of the business fixed services market in Asia-Pacific of the European and U.S.-owned telecoms service providers, David Molony, principal analyst at Ovum, said via email.
But expanding fixed and enterprise offerings aren't the only reason why buying CWW makes sense for Vodafone. It would also help the operator keep up with demands on the backhaul of its mobile network, as the popularity of smartphones grow. Going forward, mobile operators will need more and more fiber, Newman said.
If Vodafone were to acquire CWW it would get an international cable network that spans approximately 425,000 kilometers. CWW also owns UK's largest fiber network for business users, according to its website. Its product portfolio includes Web hosting, data center management, video conferencing, customer contact centers and cloud computing, the website said.
Cable & Wireless Worldwide was created in November 2009 when Cable and Wireless announced its intention to separate its Communications and Worldwide business units. Last year, ex-Vodafone executive Gavin Darby took over as CWW's CEO.
Vodafone now has until March 12 to either announce a firm intention to make an offer or that it does not intend to submit a bid, it said.