Price for BBC arm upgraded

Expectations of the amount the privatisation of the BBC's transmission services will fetch have been upgraded sharply, following the recent sale of NTL, the private-sector TV transmission company, to International CableTel for pounds 235m.

Earmarked for privatisation by the Government, BBC Transmission had been expected to generate about pounds 180m, of which a proportion would go directly to the Treasury to account for direct government payments for the World Service. But, according to industry sources, the operation could now fetch as much as pounds 250m, following the benchmark set by the NTL sale.

The BBC has declined to comment on the privatisation. But it is believed that senior managers have been encouraged by the premium price achieved for NTL, which has a national network similar to that of the public service broadcaster.

NTL, formerly part of the now-defunct Independent Broadcasting Authority, provides services to ITV and Channel 4, and has won the licence to transmit the new Channel 5. It is also a leader in the emerging digital market, and is expected to play a role in the introduction of digital terrestrial television, promised for later this decade.

The privatisation preparations are being handled by a special committee at the BBC, which is currently reviewing all the transmission assets. The Corporation is to determine exactly which of these will be sold off. For example, some of what is now part of BBC Transmission is, in fact, related to outside broadcasting facilities, which will be retained.

The timetable for the sell-off has not yet been determined. The BBC is waiting until the new Broadcasting Bill, of which the second reading begins this week in the Commons, is passed, probably by the summer. It is believed that the sale could be completed by the end of the year.

Under its plan, the BBC will be guaranteed service from the operation's new owners at a price not to exceed current levels. Moreover, it will share in the benefits of any cost savings achieved by the buyer.

It is unclear whether NTL's new owner, CableTel, will be allowed to bid, as there could be monopoly concerns.

Other possible bidders include Racal, the electronics company, BT and Carlton, the television company, which has declared an interest in broadcast services.

The BBC has said the privatisation does not mark the start of a round of asset sales.

Separately, there are concerns that a sale to NTL would place Britain's entire terrestrial television infrastructure into foreign hands. CableTel, a leading UK cable operator, is listed in New York and is overwhelmingly held by US shareholders.