C&W swoops on hi-tech outfit

COMMUNICATIONS group Cable & Wireless added to its hi-tech telephony capability today with the acquisition of Bulldog Communications, a small UK-based high-speed internet services provider.

'The £18.6m deal will accelerate C&W‘s ability to deliver directly connected digital subscriber line (DSL) solutions'‘ chief executive Francesco Caio said.

Bulldog, set up in 2000, competes with BT in the fast-growing broadband internet services market.

The acquisition is too small to head off calls from institutional investors for a major handout of the group‘s remaining £2bn cash pile.

Earlier this month we revealed that Cable & Wireless is set to resume paying dividends from June in an attempt to defuse investor anger about the mounting cash pile.

Institutional investors say they expect the company to give shareholders as much as 2p a share when it reports full-year results on 2 June.

C&W's share price jumped earlier this month after one analyst predicted it would have to share out the money through share buybacks or a special dividend payment.

But chairman Richard Lapthorne, who skipped the dividend last year, has told investors he is determined to keep the cash. One shareholder said: 'As things stand C&W will not be permitted to get back on the acquisition trail in any large scale way. If dividends are restored, investors can see merit in allowing the group to keep money in the bank.'

C&W has won plaudits for getting out of its disastrous US internet businesses more cheaply than expected, but there are still problems in its Caribbean operation and not all analysts believe the UK side has stabilised.