Bell Canada to sell CWC stake

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The Independent Online
BELL CANADA, the telecoms giant, yesterday put its 14.25 per cent stake in telecom operator Cable & Wireless Communications up for sale just two months after insisting it had "no plans" to sell the stake.

Shares in CWC dropped 9.5p to 442p as Bell said that it would use the proceeds from the sale to pay down debt and fund investments in its core businesses.

Bell declined to say when or how the sale would take place. However, it is most likely that the shares will be placed with institutional investors.

At yesterday's closing price, the stake is valued at almost pounds 940m.

Meanwhile Cable & Wireless, CWC's major shareholder with a 52.6 per cent stake, said it would participate in the placing process. The telecoms giant can raise its shareholding in CWC with approval from the other major shareholders. Bell Atlantic, the US group, holds 18.5 per cent of the shares.

A spokesman for Bell said plans for the sale had been drawn up in the past few weeks following the conclusion of a strategic review. He said the proceeds would help fund recent investments in Bell's wholly owned satellite telecom and information systems operations.

Observers said the sale was also likely to have been inspired by a change of management. Last week Bell confirmed that Jean Monty, its chief operating officer, was to become chief executive.

James Ross, telecom analyst at ABN Amro, CWC's stockbroker, said: "This announcement comes at a fortuitous time. Institutional confidence in CWC is now much better than it was before, and a lot more people are confident about the company's prospects."

CWC was created last year by a merger of Mercury, the long-distance operator, and cable companies Bell Cablemedia, Nynex and Videotron. After a disappointing start the shares have performed strongly in recent months as CWC has restructured and announced plans to launch digital television services. They have more than doubled in value since last November.

Observers said that a placing was likely to be well received by institutions, who have complained of a lack of liquidity in the shares. At the moment, just 14.7 per cent of CWC's shares are publicly traded.