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NTL acquires CWC cable unit

Two left, only Telewest to go

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Two years ago the UK had 24 cable operators. But now there are only two, following today's news that NTL is to acquire the cable television interests of Cable & Wireless Communications for £8.2 billion in cash and stocks. Meanwhile, Cable & Wireless, owner of 53 per cent of CWC, is buying out the data and business divisions, with its own shares, valueing this part of the business at £5.3 billion The upshot is that CWC, accounting for 24 per cent of Cable & Wireless turnover is dismembered; NTL becomes by far the most important cable operator in the UK, with customers in 2.8 million homes; and Cable & Wireless gains full control of CWC's 117,000 business customers. Post deal, it will also control up to 12.4 per cent of NTL. Indications are that this is a passive stake - Cable & Wireless promises to retain its holding for at least a year. The end game for the British cable industry could be only months away, with confirmation that New York-listed NTL is also wooing Telewest Communications, the UK's other remaining operator. That would give it near national coverage as a telco for consumers. NTL is also positioning itself as a credible contender in the new world of consumer broadband multimedia services, lining up against BT and BSkyB in the UK. The company has secured two big name backers -- France Telecom and Microsoft -- in its rush to create a British cable monopoly. France Telecom is by far the more important backer, in cash terms. It is underwriting the CWC take-over by pumping in $5.5 billion for up to 25 per cent of NTL. France Telecom already owns ten per cent of NTL. Microsoft operates an investment portfolio in several cable operators, including a small stake in NTL, but it disclaims any ambition to run its own cable operator. It is keen to establish its technology as the de facto set-top standard for cable TV. ®

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