C&W hits hurdles as it aims to sell Monaco business

Withdrawing from Monaco is a final step in focusing the British telecommunications company, which had operations spread from Macau to Britain’s Channel Islands, on the Caribbean and Central America.

Finance director Tim Pennington said the company knew that getting approval for the Monaco sale would be complicated and had given itself until 2014 to see it through.

“We are less confident than we were (that it will be cleared), but we have plenty of options,” he said yesterday. “The underlying business (in Monaco) is performing well, so it’s a good problem to have.”

Cable & Wireless already sold a 25 per cent stake in Compagnie Monegasque de Communication, which in turns owns 55 per cent of Monaco Telecom, to Batelco, with an option for Batelco to buy the other 75 per cent.

But it needs consent from the Principality of Monaco, which is co-owner of Monaco Telecom, for that deal to go ahead. If it does not consent, Batelco can sell its 25 per cent back to C&W.

Monaco Telecom provides mobile, broadband, fixed-line phone and pay-television services. It also has an international business focused on developing markets which holds a stake in an Afghan mobile firm.

The business is a strategic asset for the small but wealthy Mediterranean principality, which is wary of a change of ownership that would leave it with an unfamiliar business partner.

Analysts at Jefferies said CWC would receive $445m from Batelco in two stages if the deal goes ahead.

“If CWC is forced to look for other bidders, we believe Monaco would stimulate decent interest, insulated as it is from EU macro pressures, and generating clean OpFCF (operating free cash flow) margins of about 20 per cent,” they said.