C&W snaps up web-hosting giant

A telco with money for acquisitions? Are you sure?

Cable and Wireless, the quietly successful telco, has bought US web-hosting giant Exodus for £595m ($850m). According to a filing with the London Stock Exchange, Cable and Wireless is picking up 26 of Exodus's 44 web-hosting centres. Four other centres not yet in use are also included. Of these, 26 centres are in the US, two are in London and one each in Frankfurt and Tokyo. In total this makes up four million square feet. Graham Wallace, chief executive of C&W, said in a statement: "We are being selective about which of Exodus' assets we are aiming to acquire - something the Chapter 11 procedure facilitates." Wallace added that the combination of C&W, Digital Island and Exodus would offer businesses a unique combination of services. C&W expects to spend another £175m ($250m) to make the business profitable by the end of 2003. It should be contributing to bottom line profits by mid-2005. The company hopes that Exodus and Digital Island, bought in May for £240m, will create savings by working together. Exodus will also be able to sell other C&W IP services to existing customers. Exodus claims 3,500 customers, including 46 of the top 150 most-visited websites. The deal will also drive demand for C&W's backbone.