Yorkshire sold as cable consolidates

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The long-awaited consolidation of the cable industry began in earnest yesterday, with the news that General Cable was poised to acquire the 50 per cent of Yorkshire Cable Group it did not already own, in an all- share deal worth pounds 160m.

The move is the first sign of large-scale consolidation since last year's merger of Telewest and SBC Cablecomms, which had been expected to launch a rapid consolidation in the cable market.

The seller, Singapore Telecom, said yesterday it was acting on its stated strategy of shifting focus from the UK to the fast-moving Asian cable markets, particularly China.

General Cable, which owns large stakes in three regional cable operators, said it was the "right deal at the right time". Philippe Galteau, chief executive, said the company would look at other acquisition targets, "provided they enhanced shareholder value".

Analysts said yesterday that the current 15 operators were likely to be reduced to just six by the end of next year.

The next high-profile change in ownership is expected within a few weeks, when Videotron, the Canadian cable giant, is likely to announce the sale of its 56 per cent interest in Videotron Holdings, the UK cable operator, probably to minority partner Bell Cablemedia.

The purchase of the 50 per cent stake in Yorkshire Cable by General Cable will be financed through the issue of 84.5 million shares, to raise pounds 45m. Of these, 75 million will be made available in an international issue, aimed at raising cash for the group and to repay all or part of a loan made by Singapore Cable to Yorkshire.

Mr Galteau said the move was not necessarily aimed at creating a larger company. "For us, the criterion is not just getting bigger. The cable industry should concentrate on being local, and being quicker and more responsive."

But other cable operators are convinced that size is an advantage. In addition to the administrative and marketing cost savings, they point to the leverage bigger companies have in lining up programming for their cable TV networks.

Both Telewest and Nynex, the country's largest operators, have secured long-term contracts with BSkyB.