Cable & Wireless Communications Plc (CWC) has reportedly entered into a strategic alliance with Columbus Networks to develop its international wholesale capacity business.
Under the alliance, both companies will form a joint venture in the pan-America region which will provide international wholesale capacity to both, as well as to third party carriers.
As per news reports, the joint venture will have a network platform of approximately 42,000 kilometres with connectivity to 42 countries. Also, once the applicable approval requirements and conditions have been met, the joint venture will then assume ownership and management control of the international wholesale capacity operations of CWC and Columbus and all new investments in infrastructure will be made, and owned by it.
Columbus, through its wholly-owned subsidiary, Columbus Eastern Caribbean (Barbados) Inc., and CWC, through its wholly-owned subsidiary CWC WS Holdings Cayman Limited, have entered into a shareholders’ agreement governing the management and operation of the joint venture, CNL-CWC Networks Inc.
In consideration of their agreement, subject to meeting the applicable approval requirements and conditions, to transfer certain assets to, and the entry into related commercial agreements with, CNL-CWC Networks Inc., Columbus has 72.5 per cent and CWC 27.5 per cent of the issued share capital of CNL-CWC Networks Inc.
The transaction is not expected to have a material impact on the Group’s earnings. CWC’s assets subject to the joint venture arrangement had a gross asset value of $108.2 million, and recorded a loss before tax of $0.9 million in the year to 31 March 2013. Columbus’s assets subject to the joint venture arrangement had a gross asset value of $304.6 million and recorded a profit before tax of $29.3 million in the year to 31 December 2012.
