Vodafone said the deal would lead to “attractive cost savings”

UK mobile phone giant Vodafone has agreed to buy telecoms group Cable & Wireless Worldwide (C&WW) in a deal valuing the firm at just over £1bn.

Vodafone was left as C&WW’s only suitor after India’s Tata Communications ended its interest in the firm last week.

Under the terms of the deal, Vodafone will pay 38 pence per C&WW share, giving the firm a value of £1.044bn.

The takeover will add a UK fixed-line network to Vodafone’s existing mobile network.

C&WW operates 20,500km of fibre-optic cables in the UK and owning this network will give Vodafone greater capacity at a time when the increasing use of smartphones is leading to a rise in demand for mobile data.

Vodafone said the deal would also lead to cost savings, as at present it has to lease fixed-line capacity from companies such as BT.

The takeover would also lead to increased capacity and cost savings for its international business, Vodafone said.

Vodafone also said there was likely to be ”a reduction of headcount” and premises following the takeover to remove overlaps between the businesses, although it did not give any details on numbers or locations.

C&WW specialises in networking and broadband for corporate clients, including Tesco and the UK police service.

In 2010, it split from Cable & Wireless Communications, which offers telecoms services to consumers and businesses in almost 30 markets around the world including Jersey, Guernsey, the Caribbean and Panama.

However, C&WW has struggled since the separation. It has issued a number of profit warnings and is now on its third chief executive.

In the year to 31 March 2011, C&WW reported revenues of £2.26bn and a pre-tax profit of £140m. In the same financial year, Vodafone’s revenues were £45.9bn, with pre-tax profits of £9.5bn.

The 38p per share offer represents a 92% premium to the level of C&WW’s share price before the bid interest became known in February.

Shares in C&WW were trading up 5p at 37p in mid-morning trade.