Rumours boost Cable & Wireless

Reports that Deutsche Telekom is about to buy cable operator Cable & Wireless (C&W) have sent the UK firm's share price surging.

According to German business magazine Focus Money, Deutsche Telekom is close to sealing a deal worth 100bn Deutschmarks (£32.3bn, $48.8bn).

As a result, C&W shares gained 7.3% or 85 pence to £12.46.

Industry experts, however, warned that such a take-over deal was certainly possible, but not necessarily likely.

Kevin Lapwood, telecoms analyst at CCF Charterhouse, said: "Deutsche Telekom is rumoured to be taking over just about every small telecoms operator in Europe at one time in the week."

War chest

Another analyst described C&W as a "takeover candidate," but doubted whether the firm was on top of Deutsche Telekom's shopping list.

Keeping in line with company policy, Deutsche Telekom declined comment.

During the past six months, the German telecoms giant has been linked with firms like rapidly growing US start-up QWest, Telefonica of Spain, US long distance network Sprint and others.

Deutsche Telekom is sitting on a giant war chest after the recent sell-off of a second tranche of its own shares and the successful flotation of its internet subsidiary, T-Online.

The company also recently completed the world's biggest bond issue so far, raising $14.6bn.

The German telecom company is desperately seeking acquisitions in Europe and the US to boost its positions in a rapidly consolidating industry.

Its planned merger with Telecom Italia last year fell apart after it was outbid by rival Olivetti.

The takeover battle also spelled the end to Deutsche's alliance with France Telecom, whose partnership ended in acrimony.

C&W sell-off

Cable & Wireless recently sold its majority stake in C&W Hong Kong Telecom as part of its strategy to turn itself into a corporate internet and data services company.

Its networks span Europe, the United States and Asia.

The firm's shares are well below its recent high of £15.74, but have outperformed those of other telecoms firms.

The whole sector was hard hit during the global sell-off of technology, media and telecoms shares in April and May.