Vodafone, Tata Comm get more time for C&W Worldwide bids

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Vodafone and Tata Communications were given an extra three weeks to decide whether they want to bid for British telecoms group Cable & Wireless Worldwide now valued at $1.5 billion.

Vodafone, the world's biggest mobile phone carrier by revenue, and Tata now have to announce by April 19 either a firm intention to make an offer after their preliminary talks with C&W Worldwide or walk away.

Either company could also ask C&W to seek a further extension on their behalf from Britain's Takeover Panel. A previous deadline was due to expire on Thursday.

C&W Worldwide said the regulator had extended the deadline at the company's request. Sources close to the matter had earlier told Reuters C&W Worldwide was likely to seek an extension, as the two potential bidders wanted more time.

Tata Communications, 26-per cent owned by the Indian government, thinks it did not get as much time as Vodafone to evaluate a possible bid since Vodafone got an earlier extension, while Vodafone thinks it still has not received enough information to decide on a bid, said the sources, who declined to be named as the process is not public.

Vodafone said in February it was in the early stages of looking at a bid for C&W Worldwide, which has issued a string of profit warnings since it split from Cable & Wireless Communications two years ago.

Tata Communications, part of the salt-to-software Tata Group conglomerate, said on March 1 it too was evaluating a possible cash offer, a step that could trigger a takeover battle for troubled C&W Worldwide, which has fixed telephone lines that can be used to relieve pressure on mobile networks, and provides voice, data and other services.

C&W Worldwide also has an international cable network linking more than 150 countries, a factor that could be of particular interest for Tata Communications, which also has submarine cable assets.

Analyst Robin Bienenstock of Sanford Bernstein said that an acquisition would be accretive for Vodafone, but was not a necessity.

"M&A is not without reputational risk for Vodafone, but after weeks of meetings with investors we think that this deal would not jeopardise Vodafone's hard earned reputation for discipline as long as it were well explained," she said in a note.

Buying C&W would allow Vodafone to offload ever-increasing traffic generated by consumers searching the Internet on to a fixed network with more capacity, access to the target's substantial unused tax allowances, and the ability to offer a wider range of services including fixed-line deals to multi-national companies.

Standard Chartered is advising Tata Communications, and one of the sources said the Indian company had also roped in Morgan Stanley Rothschild and Barclays Capital are advising C&W Worldwide, while UBS is the adviser to Vodafone.