Were Cable & Wireless Plc to succeed in a bid for Racal Electronics Plc, would the government allow it to retain the only bit of Racal it really wants, Vodafone? When the idea was first mooted, the answer was an unequivocal yes, but on closer inspection, the issue is by no means so clear cut: Racal is right in arguing that the cellular networks could grow to become third and fourth forces in domestic telecommunications in less than a decade, in which case allowing Cables to merge Vodafone with Mercury would represent an unacceptable reduction in competition, and far from Mercury being allowed to swallow Vodafone, British Telecom’s 60% of the rival Cellnet might be called into question; meantime it seems clear that Racal is right in saying that Mercury may need Vodafone but Vodafone is better off independent.
