NTL may chop off Irish arm for €200m
'No comment' on sale rumours
The Irish Times reported on Thursday that the parent company of NTL Ireland is aiming to unload its Irish division sometime before April at a price of between €150m and €200m. At least one consortium of Irish investors is preparing a bid, while UGC Europe Communications - which purchased Ireland's Chorus Communications last month - is also expected to make an offer, the paper said.
Goldman Sachs is said to be advising NTL Group on the sale process, which has been given the codename "Jameson", according to the newspaper. An NTL Ireland spokesperson said the firm had no comment on the report.
Previously called Cablelink, NTL Ireland has over 340,000 customers in Dublin, Waterford and Galway and was purchased by NTL Group in 1999 for around £533m (€680m). As Cablelink, the business was run as a joint venture between RTE and Eircom (Telecom Eireann).
Though profitable, NTL Ireland has never proven to be worth the 1999 purchase price, which most analysts agree was highly inflated due to the telecoms boom. The exorbitant price that NTL paid for the unit, as well as several other acquisitions during the period, contributed to NTL Group's recent financial troubles, which included bankruptcy proceedings in the US that eventually concluded in a massive $10.9bn debt-for-equity swap in 2002.
Since that time, there has been regular speculation that the company would offload its Irish business as it focuses on its core UK operations. Almost two years ago, a report in an Irish newspaper suggested that NTL Ireland was on the verge of selling for as little as €100m. At the time, venture capital group Apex Partners and entrepreneur Denis O'Brien were named as possible bidders. O'Brien also sought to buy Cablelink in 1999, but was eventually outbid by NTL and its then-CEO, Barclay Knapp.
Since the 1999 buyout, NTL Ireland has been forced to rein in some of its more ambitious schemes, which at one time included integrated phone, internet and cable services. In recent years, the company has made strategic decisions to curtail its telephony offerings, although in mid-2004 NTL Ireland did say that it would invest €100m in broadband internet infrastructure.
In its most recent set of financial results, NTL Ireland posted a rise in revenues and said it had boosted its residential and broadband customers. The company's revenues in the third quarter of 2004 were up by 3.5 per cent year-on-year to €26.5m, while segment profit in the quarter declined by 17.6 per cent to €8.9m. Benefits realised in the third quarter of 2003 from the renegotiation of a number of contracts with major suppliers were not repeated in the third quarter of 2004; the company cited this as the primary reason for the decrease in segment profit.
In the results, the Irish arm of NTL also said that it had increased the number of homes that it can market to for broadband connections in the third quarter by almost 40,000, bringing the total up to 66,500. Broadband customer figures increased to 5,400, marking a penetration rate of 8.1 per cent.