Big news in the telecoms world on Monday as the planet’s biggest mobile operator, Vodafone, finally announced its intention to buy British fixed line operator Cable & Wireless Worldwide for £1 billion ($1.7bn).
The deal, which was announced this morning after Vodafone was given a four-day extension last week, has been approved by the C&WW board. Bringing the two companies together, said Voda chief executive Vittorio Colao, would create a “leading integrated player” in the U.K. business market, and push cost savings in Britain and around the world.
More importantly, it will give Vodafone — a company that has specialized in wireless, and boasts nearly 450 million subscribers worldwide, as well as a 45 percent stake in Verizon — access to C&WW’s fixed line fiber network. Cable & Wireless has long been a serious player in IP services to British businesses, although its forays into consumer service have largely been considered a disaster. And while Vodafone already has significant interests in fixed line through Verizon, this deal is a clear signal from the company that it believes integrated telecoms is the way forward.
It’s also a big day for Gavin Darby, the C&WW chief executive — a former head of Vodafone’s U.K. operation who was brought in just a few months ago to push for a sale.
Darby is likely to make a significant chunk of money from the acquisition, despite the fact he’s hardly had time to warm his feet at Cable & Wireless — and the windfall is particularly interesting since he’s unlikely to stick around after acquisition thanks to his well-publicized disagreements with former boss Colao over the company’s Chinese strategy.
Just days after joining on a sweetheart deal, Darby exercised options to buy more than $500,000 of C&WW shares at a price of £0.1689. Less than five months later, he’s forged a deal that values stock at 38 pence per share — more than double.
It’s not quite Instagram-level profit, but clearly Darby has turned the situation into a pile of cash, particularly since his contract means he doesn’t even have to take a job at Vodafone to earn out.
And while the C&WW board is happy about any deal that keeps the struggling company alive, it’s not clear what ground level staff think. Just think of the opprobrium faced by Nokia boss Stephen Elop, who joined from Microsoft, forged a deal with his former employer and has since presided over calamitous results.
Darby may not face quite the same level of hostility, however, since C&WW has been on the block for a while. Potential bidders including the telecoms arm of Indian megacorp Tata, but they pulled out last week, leaving Vodafone as the only suitor.