[Irish Times] NTL sale of Irish unit may net up to €200m

damien

NTL sale of Irish unit may net up to €200m

The owners of cable firm NTL are to sell its Irish division in a deal that could be worth €150-€200 million, writes Jamie Smyth, Technology Reporter. The sale should be concluded by April and at least one Irish consortium is in the running to buy it.

International investment bank Goldman Sachs is advising NTL on the sale and has invited several prospective Irish and international bidders to consider the company.

NTL Ireland is the State's biggest cable supplier with more than 340,000 customers in Dublin, Galway and Waterford. Its US owner, NTL Group, was rescued from bankruptcy last year by a consortium of banks and hedge funds.

The Irish Times has learned that a consortium of wealthy Irish investors is preparing a bid and has approached NTL. The group is being advised by financial advisers IBI Corporate Finance.

International cable firm UGC Europe Communications, owned by US media figure Mr John Malone, is also believed to be preparing a bid. Last month it bought NTL's Irish rival, Chorus Communications.

A spokesman for UGC said yesterday that as the largest European cable firm it would look at opportunities as they arose.

He said the firm did not comment on specific cases.

NTL Ireland is likely to be sold for a fraction of the €680 million purchase price that NTL paid for the company back in 1999 during the hype of the dotcom bubble.

UGC paid a multiple of approximately 6.9 times estimated 2004 earnings before interest, tax, depreciation and amortisation for Chorus. Using a similar formula it is estimated that NTL could sell for up to €200 million.

But any prospective buyers of NTL Ireland are likely to have to invest tens of millions of euro to upgrade its network to supply broadband internet technology.

seamus

And tens of thousands of happy Internet users watch uneasily as their service could go belly-up if bought by anyone Irish.

shinzon

hmmm

I must be the unluckiest man in ireland, just as waterford is about to get NTL broadband, what do ntl do, ahh i know well sell it off and bugger off with the profits

Its a conspiracy i tell you a conspiracy

Shin

vishal

not good news

Blaster99

Bugger off with the profits? Apart from it being stated in that article, NTL obviously paid huge money for Cablelink and if anything have lost lots of money.

It's difficult to see the big deal. NTL were hardly at the forefront of broadband rollout at the best of times and whoever buys them is going to have to pump lots of money into a rollout as that's where the money is. No point in buying them otherwise.

jd

shinzon wrote:

hmmm

I must be the unluckiest man in ireland, just as waterford is about to get NTL broadband, what do ntl do, ahh i know well sell it off and bugger off with the profits

Its a conspiracy i tell you a conspiracy

Shin

what profits?

ntl paid €680 m for cable link and ntl are selling the operation again for €200 m.
jd

shinzon

jd wrote:

what profits?

ntl paid €680 m for cable link and ntl are selling the operation again for €200 m.
jd

Sigh irony is lost on you people

Shin

Moriarty

There's now the possibility of the two major cable companys in this country being owned by the one company, creating another monopoloy situation.

Will the Dept. of ETE or the EU have anything to say on this, what with the antitrust implications, I do wonder.

Blaster99

Where is the competition in cable now? They all have franchised areas, either regulated or in effect.

BrianD

Very true about the franchising. Perhaps if both Chorus and NTL fall under single ownership it may empower a new national operator to compete on telephony, BB and TV delivery? We can only wait and see. Given the amount of money NTL paid for Cablelink and their subsequent financial woes there was never a chance NTL was going to invest to improve its infrastructure.

Moriarty

There are no franchise areas and there hasn't been for some years. Each company is open to complete competition all across the country from any company that wants to compete.

Infini

The fact that NTL might be bought by Chorus is a good/bad thing. If they bought NTL's network and just scrap the downlad limits I'd be happy to see it happen. And if the service were to improve, even better. However if the speeds were cut and there was no improvement in service it would be really bad. I've seen what chorus offers for it's broadband. The prices seem to be alright but they don't offer anything above 512k on their cable internet. Hope NTL is sold to someone who wont do a balls job and improve the service.

Blaster99

Right, so I wrote "franchised in effect". The reason there were franchises to begin with was obviously because it costs a lot of money to build a cable infrastructure so the franchise model was necessary in order to get anyone to do it. Similarly today, nobody is going to build a cable network from scratch. If you look at NTL (or probably any other Irish cable operator), they can't even make the cable network they have work properly (i.e. deliver broadband).

So my point remains, there is no competition in cable now and the ownership of NTL isn't going to change that. In my opinion, the only important aspect of cable company ownership is that they're not owned by Eircom or RTE.

Capt'n Midnight

Infini wrote:

The fact that NTL might be bought by Chorus is a good/bad thing. If they bought NTL's network and just scrap the downlad limits I'd be happy to see it happen. And if the service were to improve, even better. However if the speeds were cut and there was no improvement in service it would be really bad. I've seen what chorus offers for it's broadband. The prices seem to be alright but they don't offer anything above 512k on their cable internet. Hope NTL is sold to someone who wont do a balls job and improve the service.

You obviously haven't been reading other threads about Chorus' level of service , and what makes you think they would cut the cap ???

maybe someone like NTR would buy it (cf. IBB)

mike65

I saw Denis O'Brien mentioned as a potential buyer (Sunday Tribune).

Mike.

Rosser

I hear UGC is being tipped to buy NTL Ireland which if their web site is to be believed is only a good thing...they're replacing their existing co ax network with fiber!

http://www.unitedglobal.com/euFmain.cfm

mike65

Sunday Tribune mentions Setanta as being a possible bidder with the aid of additional capital funding The article also states the deal will be done (with Goldman Sachs advising/running the process) with one of up to 7 potential bidders in 6-7 weeks.

Mike.

SkepticOne

Rosser wrote:

I hear UGC is being tipped to buy NTL Ireland which if their web site is to be believed is only a good thing...they're replacing their existing co ax network with fiber!

http://www.unitedglobal.com/euFmain.cfm

Without wanting to sound too pessimistic, UGC don't seem to be saying that they are replacing all coax with fibre. The nearest thing I can find is:

UGC Europe has some of the most technically advanced cable systems available anywhere in the world. The company’s cable networks are currently being digitized and upgraded to 860 Mhz hybrid fibre coaxial cable, to carry fully interactive two-way traffic,

Hibrid fibre coaxial cable normally means that the bit going into the home is still coax, but this coax is connected to a fibre network. This, however, is standard for any cable network offering broadband. It is what NTL have done in those areas that are upgraded for cable internet.

Also here:

When the company upgrades its systems, it replaces parts of the coaxial cable with fiber optic lines, and upgrades the remaining coaxial cable to increase transmission speed, and enable signals to be sent both to and from the subscriber's home. This upgrading enables UPC Broadband to provide digital video, telephone, and Internet/Data services.

Again, this is just the normal upgrade for broadband cable. Before upgrading, all the system is coax. After upgrading only the bits supplying the home remain coax.

I wouldn't personally get too excited no matter who it is that eventually buys the company. After all, NTL engaged in exciting upgrade programs in Britain and the other countries they owned cable systems, but in Ireland it was very much business as usual. Only now have they announced upgrades for Waterford and Galway.

Looking at UGCs figures for two-way systems we see:

Homes Passed 13,645,000
Two-Way Homes Passed 8,936,300

So just over half their network is two-way. There is a lot more to do and no guarantee that Ireland will have priority. With NTL, they had finished most of their upgrading and were finally turning to Ireland. UGC's priority is likely to be those areas with good coax but still one-way systems as this requires only a core fibre upgrade (like much of the UK for NTL).

dahamsta

Two points:

a) We don't want John Malone buying NTL. Trust me on this. He's innovative in competitive markets, but Chorus is truly representative of his style in non-competitive markets.
b) If the Competition Commissioner and ComReg let John Malone buy NTL, the nuttiest member of IrelandOffline should be rounded up, given some kind of weapon, and pointed in the direction of their houses.

adam