Cable & Wireless Communications (C&W) is in discussions to sell its 51% stake in a Macau telecoms operator as it looks to reduce debt and focus efforts on the Caribbean region.
The operator confirmed earlier today that it was holding talks with CITIC Telecom International Holdings (Hong Kong) about selling its shares in Companhia de Telecomunicações de Macau (CTM), which provides mobile-phone services and broadband services and is the only fixed-line voice business in Macau.
CITIC already owns 20% of CTM and could be interested in gaining control of the company as it expands its international operations.
According to the Financial Times, citing people familiar with the issue, the deal could raise as much as $600–650 million, although C&W (London, UK) has not disclosed any financial details.
Possible funding of the acquisition by CITIC could come from internal resources, bank or debt financing or equity financing, including a rights issue, reports The Wall Street Journal.
C&W has undergone some dramatic changes in the last couple of years. In 2010, it split into two businesses – C&W Communications, with operations in the Caribbean, Panama, Macau and Monaco, and C&W Worldwide, with interests in Europe, the US and Asia.
Earlier this year, C&W Worldwide was taken over by Vodafone (Newbury, UK).
C&W had debts of about $1.4 billion at the end of June and could use the proceeds from a sale of its CTM stake to reduce borrowings.
The sale would also allow it to concentrate on the Caribbean region and Panama, which generated more than 60% of the $2.875 billion C&W reported in revenues last financial year.
C&W faces tough trading conditions in this part of the world – due to macroeconomic weakness plus competitive and regulatory pressures – and is also investing heavily in high-speed mobile data networks in the Bahamas, Barbados and Cayman.
Operating profits in the Caribbean squeaked up just 2% in 2011, to $103 million, while in Panama they shrank 7% to $185 million.
By contrast, in Macau, where GDP rose by 21% in 2011, operating profits were up by 10%, to $132 million, on revenue growth of 39%, to $524 million.
The strong performance was boosted in particular by the popularity of the iPhone.