By Kate Holton and Paul Sandle
LONDON, Nov 13 (Reuters) - Cable & Wireless CommunicationsPlc believes its expensive victory in the battle to buybroadband and TV provider Columbus will give it the heft itneeds to take on fierce rival Digicel in the Caribbean.
C&W, which has sold operations from Macau to Monaco, agreedto buy Columbus last week for $1.85 billion plus $1.17 billionin debt, after fending off competition for the firm backed bypay-TV mogul John Malone, chairman of Liberty Global Plc.
The cost at 12.3 times core earnings raised eyebrows amongsome analysts, but the group believes the strong growthtrajectory means the multiple will come down quickly.
"We were up against people with bigger pockets than ours,"Chief Executive Phil Bentley told Reuters. "We've added a lot ofdebt ... but we wake up today no longer the weakest in athree-player market, we're now the strongest in a two-playermarket."
The deal makes C&W the biggest fixed-line operator inJamaica, Barbados and the southeast Caribbean, with anindustry-leading TV offer in channels and content, he said.
The combination makes it a bigger threat to Digicel, theprivately-owned company founded by Irish entrepreneur DenisO'Brien, which operates in 33 markets in the Caribbean, CentralAmerica and Asia Pacific
"We are fighting in the trenches with Digicel in everymarket," Bentley said. "Logically this would have been a goodfit for them."
Bentley said C&W had won the auction for Columbus afteroffering $1.1 billion of shares to Malone and Columbusco-founders John Risley and Brendan Paddick, on the basis thatC&W will buy them back at 46 pence each in tranches between 2016and 2019 if they wish.
"We were up against cash-only bidders and we couldn't do allcash, we had to give them something as cash equivalency," hesaid, adding he did not expect them to sell, while theirpresence on the C&W board would bring needed expertise.
The deal will also transform C&W in the eyes of investors,he added.
Previously viewed as an owner of fusty telecoms assetsspread around the world, its growth potential and focus in theCaribbean was attracting interest in the United States, Bentleysaid, adding it is running a roadshow to promote itself toinvestors. (Editing by David Holmes)
