Racal Electronics Plc’s Vodafone cellular telephone unit and Cable & Wireless Plc’s Mercury Communications Ltd have agreed direct transfer of telephone traffic between their two networks, bypassing the British Telecom network. With cellular telephone penetration particularly high in the City of London, where Mercury also has its highest proportion of customers, the volume of traffic able to take advantage of direct connection is likely to be substantial, and by cutting out Telecom, the arrangement will raise the revenues of both companies.