France Telecom tipped for Cable & Wireless takeover

Speculation is growing that UK telecommunications operator Cable & Wireless (C&W) could be the subject of a multi-billion pound takeover bid.

A report in the Sunday Telegraph  claimed that France Telecom is planning a £4bn bid for C&W. If successful, France Telecom would then merge Bulldog, C&W's broadband service, with its own Wanadoo operations.

Bulldog was itself taken over by Cable & Wireless in May 2004, after being one of the few companies to install its own equipment in BT's local exchanges — a process known as local-loop unbundling (LLU).

This allows Bulldog to offer better services than ISPs who just resell BT's wholesale services. Bulldog's 8Mbps broadband product is one example.

Action taken by Ofcom last year has made LLU more feasible, and Wanadoo recently said it would spend £300m unbundling BT exchanges. Acquiring Bulldog's existing network, though, could help it to compete with BT at the wholesale level.

France Telecom denied the report, with a spokesman describing it as "pure fantasy", and some observers have suggested that C&W could be looking to encourage takeover speculation. C&W's share price has risen over 20 percent since the start of May, which appears to suggest that a bid is likely.

Andy Evans, Marconi's chief technical and information officer, suggested last week that rival telcos — such as C&W — could manage to build next-generation networks in the UK faster than BT.