MercoPress. South Atlantic News Agency

Cable & Wireless acquires major Caribbean telecoms company

C&W now doubles in size and increases its Caribbean and Central American footprint with the addition of Columbus’ 700,000 residential customers in the region.

Columbus International Inc., the fiber-based telecoms company which operates in the Caribbean as Flow, has been acquired by LIME parent company, Cable & Wireless Communications Plc. (CWC), in a 3bn dollars buyout deal announced last Friday.

 CWC will pay 1.9bn for the privately-held, Barbados-based business, and will also assume Columbus’ net debt, which stood at 1.17bn as at June 30, 2014.

Cable & Wireless Communications dropped 8% on news of the Columbus deal, which is being funded by 707.5m in cash, an issue of 1.5 billion shares to investment vehicles controlled by Columbus’ co-founders, and a share issue worth nearly 10% of the outstanding capital.

Cable-television billionaire John Malone, Columbus’ largest single minority shareholder, will own 13% of Cable & Wireless Communications as part of the overall 36% stake owned by Columbus’ shareholders in the enlarged company.

C&W now doubles in size as a result of the Columbus deal, and increases its Caribbean and Central American footprint with the addition of Columbus’ 700,000 residential customers in the region.

Phil Bentley, Cable & Wireless Communications’ Chief Executive, says that the move will help the company to grow and to realize significant synergies in operating costs and capital expenditure. Columbus also adds a significant pay-TV operation and fiber network to C&Ws existing businesses.

“This is a transaction that transforms CWC, providing a step-change in growth and returns,” Bentley said in a company statement that indicated that the transaction will be earnings-neutral in its first year, and materially earnings enhancing in subsequent years.

Commenting on the deal, Jefferies analyst Jerry Dellis said that the Columbus acquisition will accelerate the delivery of CWC’s strategic aims, and create better long-term market structures:

There is overlap in 6 countries (Jamaica, St Lucia, Barbados, St Vincent, Antigua, Grenada) plus Trinidad & Tobago (TSTT associate).

In these territories, CWC was set to embark on substantial investment in fiber to bolster in broadband pay TV. Columbus provides this infrastructure with high-quality (fully upgraded) cable and 700,000 subscribers.

The buyout of Columbus reverts many Caribbean markets to a duopoly telecoms structure, with the Irish telecom firm Digicel being the sole competitor to Cable & Wireless’ LIME operations in several Caribbean markets.