Apparently it isn't just the US fiber market that is seeing a surge in M&A activity. According to a report in the Financial Times today, UK-based Cable & Wireless is considering the sale of its international division. And apparently, there is already a bidder out there - Pacnet apparently has put a $500M bid on the table. If the rumor is true though, there are probably other bidders out there that would drive up that price. But first, a bit of perspective from the company's numbers.
Cable & Wireless's international business managed £557M in revenues in the year ended March 31, 2011, of which about 65% is enterprise and 35% carrier/wholesale. That's about 25% of the company's business, the other 75% of which is UK-centric. Enterprise revenues were up slightly over last year, offset by declines in the wholesale business related to the voice business. For the past few quarters, they have not been making investors particularly happy. The company's networks stretch around the globe, totaling 500,000km - much of it undersea. Some of that they own all of, e.g. the Apollo transatlantic cable, some they own as part of a consortium, e.g. they are one of the backers of the new Europe-India Gateway cable, and some they lease, e.g. local assets in Asia.
So who would want all that? Pacnet would certainly be an interesting buyer, it would give them a foothold outside their traditional Asia/Pacific turf. But they also have a history of, shall we say, having a bigger bark than bite. Tata or Reliance would probably be more likely to win an auction if they came up with the motivation - both have been rather quiet on the M&A front for a while. I would say that Level 3 would be a likely buyer, intending to merge it with the Global Crossing international business, however the timing for that is not right and they probably won't even nibble.
But perhaps a more likely contender in my view would be NTT, which has been making significant moves on the international corporate market and very well might want these assets. And then there is Verizon Business, which unlike AT&T is not currently busy and in the wake of its purchase of Terremark just might be interested in adding depth to its international business as it prepares to address more of that market via the cloud.