LONDON, Nov 13 (Reuters) - Cable & Wireless Communications Plc believes its expensive victory in the battle to buy broadband and TV provider Columbus will give it the heft it needs to take on fierce rival Digicel in the Caribbean.
C&W, which has sold operations from Macau to Monaco, agreed to buy Columbus last week for $1.85 billion plus $1.17 billion in debt, after fending off competition for the firm backed by pay-TV mogul John Malone, chairman of Liberty Global Plc .
The cost at 12.3 times core earnings raised eyebrows among some analysts, but the group believes the strong growth trajectory 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 of debt ... but we wake up today no longer the weakest in a three-player market, we're now the strongest in a two-player market."
The deal makes C&W the biggest fixed-line operator in Jamaica, Barbados and the southeast Caribbean, with an industry-leading TV offer in channels and content, he said.
The combination makes it a bigger threat to Digicel, the privately-owned company founded by Irish entrepreneur Denis O'Brien, which operates in 33 markets in the Caribbean, Central America and Asia Pacific
"We are fighting in the trenches with Digicel in every market," Bentley said. "Logically this would have been a good fit for them."
Bentley said C&W had won the auction for Columbus after offering $1.1 billion of shares to Malone and Columbus co-founders John Risley and Brendan Paddick, on the basis that C&W will buy them back at 46 pence each in tranches between 2016 and 2019 if they wish.
"We were up against cash-only bidders and we couldn't do all cash, we had to give them something as cash equivalency," he said, adding he did not expect them to sell, while their presence 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 assets spread around the world, its growth potential and focus in the Caribbean was attracting interest in the United States, Bentley said, adding it is running a roadshow to promote itself to investors. (Editing by David Holmes)