THE WRAP: Vodafone buys C&WW, Nokia downgraded again

John C. Tanner
27 Apr 2012

It was the week that saw Vodafone buy a global carrier, as Nokia suffered another credit downgrade and TRAI angered India’s mobile operators again.

The race – such as it was – to buy out Cable & Wireless Worldwide effectively ended this week after C&WW bosses approved a cash offer by Vodafone Europe that values the firm at just over $1.6 billion.

The deal could still come under review if someone else makes a better offer, but Tata Communications – the only other company to make a bid – dropped out of the race last week. Assuming shareholders follow C&WW management’s recommendation to sell, the firm will become a division of Vodafone Group’s enterprise business.

It was also the week where Nokia had its credit rating downgraded for the second time in as many weeks – this time from Fitch Ratings, which downgrade the handset maker’s stock to junk level.

Nokia EVP and CFO Timo Ihamuotila shot back, pointing to the firm’s strong cash balance and net cash position during 1Q12, and said management is working fast to position the company for future growth.

Unhelpfully, news emerged this week that Nokia still facesa patent-related ban in Germany, even though the European Patent Office (EPO) ruled that German-headquartered patent licensing firm IPCom had no claim to a patent that it says Nokia has been violating. IPCom says it will appeal the ruling, which it claims means that previous court injunctions against Nokia will remain in force.

In other news for the week, Indian telecoms regulator TRAI freaked out cellcos with its recommended plan for reallocating the 2G spectrum vacated from the cancellation of 122 licenses.

The recommendation – that spectrum be priced at premium rates– including a thirteen fold hike in the base price for 2G airwaves – was blasted by cellcos as “arbitrary, regressive and inconsistent.”

TRAI also reportedly issued an order making it mandatory to offer at least oneper-second billing plan among the up to 25 plans they are allowed to provide. Operators responded that they were happy to offer per-second billing, but complained the 1 paisa per second cap was too low.

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