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MS to spend another $4bn on UK C&W deal?

Help - Microsoft's trying to buy all of us. Another few billion and we'll have to cut interest rates...

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Microsoft's spending spree is - believe it or not - accelerating, with the company now tipped to blow $4 billion on up to 30 per cent of UK cable TV operator CWC, a Cable & Wireless subsidiary. What with MS already having slices of Telewest and NTL, and sweethearts deals with British Telecom on the go, it's beginning to look worryingly close to a Redmond shop round these parts. That's not all -C&W cellular subsidiary One2One is on the market, and some kind of mega version of the Nextel deal could be on the cards. But that would cost even more dollars than Microsoft has spent so far, possibly too much for MS chief financial dispenser Greg Maffei, who's been knitting all this stuff together. The common thread in the deals seems clearly an attempt to buy up franchises that are being won by or have already gone to the opposition. The $600 million for Nextel switched Microsoft's MSN into the slot that was going to be occupied by Netcenter, while $5 billion to AT&T expanded the company's commitment to CE up in the direction of 10 million units (but only maybe, and Java hasn't been officially blown out yet). In the UK, if the CWC deal goes ahead, CWC's commitment to NCI boxes will stand in some peril. NCI has already been pressured by Microsoft in NTL, another UK outfit where $500 million for 5 per cent resulted in a more MS-friendly deployment plan, and Microsoft got 29.9 per cent of Telewest last week as part of the confusing AT&T deal. Which gets more confusing here, as Telewest and CWC have been talking about getting together. The Telewest stake didn't actually result in more units for CE, but Telewest's future will likely go into the pot with any CWC deal, and that will be when MS hits the jackpot again. But here's a thought. You know they say CE is too expensive to make it in the consumer electronics market? Well obviously. If we allow a generous 5 million units for the $5 billion to AT&T, that makes the boxes $1,400 each, if you factor in a 40 per cent margin for Microsoft. The ones for Nextel, at $600 million for 3 million users, are only $200 each ($280 with margin), but hey - they're only cellphones. ®

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