UPDATE 1-C&W Worldwide up on report SingTel mulling bid

* Report says Singapore Telecom looking at options

* Shares in C&W Worldwide up 4.4 percent; SingTel up 0.3 pct

(Adds detail, further reaction)

LONDON, Sept 6 (Reuters) - Shares in Cable & Wireless Worldwide CWP.L rose to their highest level since a profit warning in July after a weekend report that Singapore Telecom STEL.SI was considering a bid for the British operator.

The Independent on Sunday said SingTel was running a rule over corporate telecoms company C&W Worldwide, and had contacted bankers in Asia and Europe to discuss options. [ID:nLDE68409C]

Singapore Telecom and Cable & Wireless Worldwide both declined to comment.

Shares in C&W Worldwide have languished since March when Cable & Wireless was split into an enterprise arm and the consumer-focused Cable & Wireless Communications, which runs networks in the Caribbean.

C&W Worldwide warned in July that work for the UK government, which acocunts for about 12 percent of its revenue, had ground to a halt, sending its shares down 18 percent. [ID:nLDE66J09A]

They bounced 10 percent last week on the back of trader reports that AT&T T.N was interested in a bid, and were 4.5 percent higher at 76.2 pence on Monday, the top gainer in the FTSE 100 index .FTSE, by 1105 GMT. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Reuters Breakingviews column on [ID:nLDE6850P4] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Arthur Pineda, a Singapore-based analyst at Citigroup, said it was too early to say whether Singtel would put in a bid.

“We see limited scaleability of the business if SingTel does acquire C&W, with the majority of its revenues linked to UK-based operations,” he said in a note to clients.

SingTel shares closed 0.3 percent higher, underperforming the benchmark Singapore index .FTSTI, which rose 1.07 percent.

A London-based analyst, who asked not to be identified, said an acquisition could stack up, as SingTel could afford to take a longer-term view than investors concerned about UK government cuts.

“SingTel has quite a well-developed data business in India and South East Asia, which are areas of focus for C&W. So it would be sensible in terms of the mix,” he said.

Nearly a quarter of Cable & Wireless Worldwide’s 2.27 billion pounds ($3.5 billion) of revenue came from operations in India, the Middle East, Africa and South East Asia last year.

Jerry Dellis, an analyst at Jefferies, said in a note last week that although risks of further downgrades remained, the shares were pricing in very prudent expectations longer term.


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