Cable & Wireless stock soars 6.3% on bid talk

CABLE & WIRELESS added another business to its growing Internet portfolio yesterday as its stock soared 6.3 per cent on renewed rumours that the company recently received approaches from a number of foreign telecoms operators.

Spurred on by press reports, on which the company refused to comment, C&W shares ended up 49.5p at 831p in heavy volume of 13.8 million shares.

Among those considered to be in the frame for C&W were Deutsche Telekom, which recently lost out to Olivetti in a bid to be a white knight to Telecom Italia. France Telecom and US network operators SBC Communications and Bell Atlantic were also said to have made informal approaches.

C&W was understood to have rejected the overtures since a deal now would undervalue the company, which has sharply underperformed the UK telecoms sector in the past year.

On Friday, C&W reiterated that underlying earnings would be significantly reduced this year due to restructuring and investment costs.

The acquisition of privately owned Internet Network Services (INS) for an undisclosed sum fits in with C&W's latest strategic about face to focus on adapting its networks to run on Internet protocol, or IP, technologies.

INS, which saw 1998 sales jump 79 per cent to around pounds 13m, specialises in connecting business to the Internet and other related services, including web site development.

Analysts estimated that C&W was likely to have paid pounds 75m-pounds 100m for the company, which was sold with liabilities of pounds 8m. "By acquiring INS, C&W has taken another important step towards its goal of providing Internet protocol services backed up by the C&W global communications network," said Lance Spencer, managing director of IP and customer solutions.

C&W has moved aggressively to build up its on-line presence since agreeing last year to pay $1.75bn for the Internet-related assets of MCI, as well as ploughing in a further $600m to expand the network to different parts of the US.