The European Commission has given its approval for Vodafone Group's acquisition of Cable & Wireless Worldwide (CWW) for £1.04 billion, stating that the transaction will raise no competition concerns as the parties' activities are largely complementary.
Both Vodafone and CWW provide fixed and mobile telecommunications services in Europe, but CWW's main activity is related to fixed telecoms, whereas Vodafone is mainly focused on mobile telecoms.
CWW owns the UK's largest fiber network for business users, and an international cable network spanning approximately 425,000 kilometers. The acquisition will make Vodafone the second largest telecoms business in the UK, after BT.
"Vodafone and CWW's activities overlap in a number of markets in the fixed and mobile telecommunications markets in the UK. However, the Commission found that the impact of the transaction on these markets is likely to be small as the combined entity would continue to face significant competition from other market players post-transaction," the EC said in a statement.
The deal will give Vodafone a comprehensive fixed network in the UK and across Europe, allowing the company to sell bundled fixed and mobile services, which is key to its objectives of becoming a 'total telecommunications' player and ramping up its enterprise business.
Analyst firm Frost & Sullivan said that CWW's service offerings for both integrated communications and data hosting will allow Vodafone's business services division - Vodafone Global Enterprise - to compete with some of the leading fixed-line players, such as Orange and Telefonica.
"Following Vodafone's news that it has plans to dispose of non-core assets, such as the latest announcement in May about Gateway Communications in South Africa, we believe Vodafone is signalling its ambitions to capture all related digitalisation services around enterprises," said Yiru Zhong, senior industry analyst for the ICT group at Frost & Sullivan.
The acquisition will also strengthen Vodafone's position in the market for machine-to-machine (M2M) communication, the technology behind the Internet of Things that could enable smart cities of the future. M2M allows electronic devices to communicate with one another via SIM cards that can connect to wireless sensors and the mobile internet for management and monitoring, and to provide services.
"With entrenched M2M and vertical strategies, Vodafone further demonstrates commitment to tap into future M2M and smart opportunities," said Zhong. "Vodafone's core services around mobility and now enterprise communications put them in front of competition for connectivity partnership.
"The market for M2M and smart industries now looks even more dynamic as specialist players also have a good choice of communications partners with whom to go to market together," added Zhong.
CWW was created in November 2009 when Cable and Wireless announced its intention to separate its Communications and Worldwide business units. Last year, ex-Vodafone executive Gavin Darby took over as CWW's CEO.