Cable giants report record revenues

10 May 2005

In the immediate aftermath of UGC’s acquisition of NTL Ireland, the major players involved — UGC and NTL — have both turned in record first-quarter revenues that illustrate a Europe ready to embrace the promise of triple play services, involving broadband, telephony and television.

In the past 24 hours, Morgan Stanley, operating on UGC’s behalf, acquired NTL Ireland for €325m. UGC has since stated it intends to acquire NTL Ireland from Morgan Stanley for €329m, which includes a €4m administrative charge, pending approval from the Competition Authority of Ireland.

In reporting first-quarter revenues, London-based NTL reported its sale of its Irish subsidiary for €325m and turned in a total revenue for the first quarter of £517.3m sterling, up 0.7pc on the previous quarter. NTL CEO Simon Duffy said the sale of the Irish division positions the company well for the next stage of its development. In recent days there has been speculation that NTL may be about to merge with Telewest.

Commenting on the sale of NTL Ireland, the company said: “We intend to use the net sale proceeds to repay principal amounts outstanding under our senior credit facility in accordance with its terms. In the second quarter of 2005, Ireland will be accounted for on the basis of discontinued operations.”

In the Irish market, the company reported revenues of £19.2m sterling, up 9.7pc over the previous year, driven by strong take-up of digital TV services and increases in TV pricing. Residential customers increased 2,400 to reach 350,100, as monthly churn declined to 0.7pc during the quarter.

The company said ongoing investment in broadband in Ireland increased the number of marketable broadband homes to more than 102,000. Present broadband customers increased by 2,500 to reach 10,000 in the first quarter, a penetration of 10pc of marketable homes.

Graham Sutherland, NTL Ireland’s CEO, commented: “Customer numbers increased by approximately 2,400 to reach 350,100 with revenue for the first quarter at €27.7m, up 8pc over the same period last year. We will continue to focus on maintaining this extremely positive trend across all key product and market segments.”

Meanwhile, UGC reported a revenue growth of 46pc to US$798m, through the addition of some 140,100 customers during the first quarter, driven by robust demand for broadband and digital telephony services.

Acknowledging his company’s acquisition of NTL Ireland, UGC’s chief executive Mike Fries said: “We expect to generate meaningful synergies from the merger of NTL Ireland’s business with our Chorus asset, if the transaction receives regulatory approval. The Republic of Ireland is one of the fastest growing economies in western Europe and we are well positioned to participate in the rapid growth of broadband services there.

“In Europe, UGC is poised for the rapid expansion of digital phone (voice over internet protocol, or VoIP) services across several new markets. In the meantime, digital phone sales remain strong, averaging more than 5,000 per week in the Netherlands and Hungary, and we recently began our commercial VoIP launch in France.

“We are also aggressively increasing the speeds of our broadband internet products across Europe, beginning with 20+ Mbps Extreme products already launched in the Netherlands, Norway, Belgium and Sweden. Finally, we recently announced our plans to migrate all of our cable subscribers to digital in the Netherlands, which we expect to begin in the fourth quarter of 2005. As a result of this initiative, we expect to eventually deploy more than two million digital set-top boxes and enhance our leading position in the Dutch pay-TV marketplace,” Fries said.

Last year, UGC acquired Irish cable operator Chorus for €55m. In its first-quarter results the company reported that Chorus generated some €23.2m revenues during the quarter and boasted a total of 201,200 revenue generating units out of a total existing marketable home base of 317,900 homes.

By John Kennedy