Cable & Wireless's war chest is overflowing after the sale of its Australian mobile business.
The data communications group needs to move swiftly to make an acquisition, buy back shares - or become a bid target itself.
The sale of C&W's 52.5 percent stake in Cable & Wireless Optus to Singapore Telecommunications will raise C&W's cashpile to around six billion pounds (US$8.59 billion) - representing almost half the group's market value.
"The cash on its balance sheet has definitely made it an acquisition target," said a London telecoms analyst, who declined to be named.
Shares in C&W, which operates the third largest global network for Internet services, were driven as much as 11.5 percent higher in London.
The UK company will receive around 2.9 billion pounds cash from the sale of its C&W Optus stake.
C&W's cash pile has dwindled to around 3.2 billion pounds from four billion since September, but when the SingTel deal goes through in a few months, C&W's cash balance will be boosted to over six billion pounds.
Investors, impatient with C&W's lack of progress in targeting acquisitions and shaken by a profit warning earlier this month, have told the group to make a purchase or return cash to shareholders within the next six months.
Finance Director Robert Lerwill was quoted as saying on Monday that a share buyback was one option C&W would look at as it sought ways to reduce its cash pile.
Job cuts
Earlier this month, C&W announced 4,000 job cuts and said its profits would fall short of analysts' forecasts, blaming tumbling prices in the United States and Japan.
Analysts said that C&W was a tempting prize but dire market conditions could go against any predator.
"I'm sure there are many companies that would love to get their hands on C&W," said Paul Mount, telecoms analyst at Nomura Bank. "But most potential buyers would opt for issuing equity, and that would not be very attractive for C&W shareholders."
C&W said it would give details of how it intended to use its cash when it unveiled its annual results in May.
