France Telecom was kept busy this morning stamping out rumours that it is preparing to splash out £4bn to take over Cable & Wireless.

If the reports are correct, the deal would set the stage for a merger of the firms' ISP arms, Wanadoo and Bulldog.

The Sunday Telegraph quotes one unnamed executive as saying: "There is absolutely no doubt that France Telecom is looking at making a bid for Cable & Wireless."

However, France Telecom has denied the story saying it simply isn't true.

"France Telecom formally denies this information," a spokeswoman for the European telco told The Register.

Despite the denial, the acquisition would make sense for Wanadoo, - which is owned by France Telecom. The ISP is keen to offer telecoms and internet service direct to end users and has committed itself to investing in local loop unbundling (LLU).

While it is prepared to invest the cash itself, buying C&W-owned Bulldog would give it access to a LLU operator that has already invested heavily in installing its kit in BT telephone exchanges.

At the end of May, Bulldog had installed its kit in 400 BT exchanges - seven months ahead of schedule and has since pledged to wire up a further 400 exchanges by the end of next year. ®

Related storis

C&W goes large on LLU
Billing snafu hits Bulldog
Bulldog to extend reach of unbundled broadband
Bulldog service suffers 'performance issue'
Broadband growth buoys Wanadoo
Wanadoo UK begins major broadband drive