Cable & Wireless Communications Plc is doubling the size of its managed network services division with the 47m pound cash purchase of the UK network integration and support services division of Anite Group Plc. The division, which turned over 58m pounds last year, is both profitable and growing says C&W, who estimates that the deal will accelerate its plans for growth in the UK managed data services market by at least two years. C&W Communications was formed in November last year with the merger between Mercury Communications Ltd and three big cable operators. The company has a high capacity fiber network, but not enough expertise and resources to sell its customers the full range of managed data services. And so the company has been in the market for a good deal, with negotiations for this sale beginning way back in the summer. All the large telecommunications companies are fighting to get into this market. Instead of just selling raw data capacity to internet service providers and large companies, telcos are trying to buy up the expertise which will allow them to act as full ISPs in their own right. ISPs sell companies various levels of managed data services, offerings that generally include Wide Area network hardware, software, installation and monitoring, technical support, message and web server hosting. Telcos don’t traditionally have this kind of expertise, a fact well demonstrated by WorldCom Inc’s takeover of Compuserve Corp, which gave it America OnLine’s managed networks business, ANS Communications Inc, and Compuserve Network services. This allowed Worldcom, which already owns a business ISP in UUNet Technologies Inc, to get into the lucrative high-end managed data business. The sale to C&W leaves Watford-based Anite Group (formerly Cray Electronics) with 40m pounds in cash, a poorly performing Antipodean networking arm that C&W didn’t want, and more importantly, its favored Anite Systems software business, based around its best selling modular business package, Unison. Under Anite’s supervision, the networking business has been struggling to perform, and C&W think they can run it leaner and better. Anite sold off all of its hardware manufacturing capability earlier this year but still struggled with a lack of sufficient cash to run its two remaining divisions in networking and software. Its shares have dropped from 200 pence in 1994 to around 50 pence, and the results for the six months to October show net losses of 730,000 pounds on revenue that dropped by 24%. Anite chief executive John Hawkins, who joined a month ago, hopes the deal will finally draw a line under the group’s troubles and allow him to focus on our core systems business. After a recent lift in Anite’s share price on speculation about the deal, the shares dipped 11% to 45.5 pence while C&W Communications rose 5 pence to 286.5 pence.
