On Friday afternoon Vodafone announced it is creating a new Group Enterprise unit, which will help accelerate the merger of Cable & Wireless Worldwide (CWW), acquired earlier this year (see Vodafone finally bags CWW for £1bn). The move is in response to what Vodafone says is “strong customer demand for combined products and services”.
The Group Enterprise Unit will consist of four teams: Vodafone Global Enterprise; Vodafone Carrier Services; Machine-to-Machine solutions; Hosting and Cloud Services. Current CWW CEO, Nick Jeffery, will lead the new unit and report directly to Vittorio Colao, Vodafone’s CEO. Last month we questioned the impact the acquisition would have on CWW’s ambitions for growth in hosting (see Will the Vodafone acquisition strengthen CWW’s hosting business?). The fact that there is a standalone “Hosting and Cloud Services” team bodes well for that, however Jeffrey will have his work cut out to ensure this grows in such a way to instil fear back into the hearts of CWW’s competitors.
Integration costs are expected to reach approximately £500m by March 2016. By which time Vodafone says it will be able to deliver cash flow synergies of between £150m and £200m a year, resulting in operating free cash flow for the Group of £250m to £300m from the acquisition in 2016.