CableTel buys NTL broadcast network for pounds 235m

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The Independent Online

Media Editor

International CableTel, Britain's third largest cable operator, is paying pounds 235m for NTL, the leading commercial broadcast services provider, as a step toward creating a truly national telecommunications network.

The move will bring together NTL's national transmission operations and CableTel's local fibre-optic cables, which provide 57,000 homes with cable TV and telephony. The result will be end-to-end broad-band connections, allowing high-speed links carrying voice, data and video. CableTel will be able to use the NTL transmission network to bypass BT and the other national telecoms operators. NTL recently won a national licence to provide fixed radio telecommunications, which will accelerate CableTel's creation of a national network.

"This creates a unique national telecoms competitor," Barry Knapp, chief executive of CableTel, said.

He added that the company intends to make the network available to other cable operators, which have been seeking ways of avoiding the charges made for the use of networks operated by BT, Mercury and Energis.

NTL, which supplies transmission services to ITV, Channel 4 and independent radio stations through a network of 600 masts and microwave links, was sold off by the Government when it disbanded the old Independent Broadcasting Authority in 1991. An investment group led by a division of Mercury Asset Management bought the operations for pounds 70m.

In addition to pounds 200m in cash, financed through bank loans, CableTel will pay NTL shareholders, which include its employees, another pounds 35m in a year's time.

The shareholders of NTL will have seen a 235 per cent return on their investment in just five years. The deal is likely to fuel renewed criticism over the privatisation of Government-owned assets at fire-sale prices, and could lead to a sharply higher valuation for the BBC's transmission services, which have been earmarked for sale, perhaps by the end of the year.

Jeff Hoon, Labour spokesman on information technology and telecommunications, said last night: "This just demonstrates the concerns we had at the time of privatisation. If [the BBC sale] goes ahead, we must ensure that a proper price is paid."

Last year, NTL had revenues of pounds 109m, and pre-tax profits before extraordinary items of about pounds 37m. It has been a big capital spender, in order to finance development of its broadcast and telecoms contracts, which include satellite as well as radio transmission. It recently won the right to provide transmission services for Channel 5, the terrestrial service scheduled for launch in early 1997.