NTL said this afternoon that it has completed the sale of its Irish division to US banking giant Morgan Stanley for €325m. This paves the way for Morgan Stanley to enter into immediate negotiations with the Competition Authority about European cable player UGC taking over the former NTL operations in about six to nine months.
In a statement NTL said that it has sold its telecoms operations in Ireland to MS Irish Cable Holdings BV, an affiliate of Morgan Stanley. NTL said it intends to use the net sale proceeds to repay outstanding amounts under its senior credit facility.
NTL said that it has been advised by Morgan Stanley that the bank has entered into an agreement with UPC Ireland, an indirect subsidiary of UGC for the further sale of the NTL Ireland division to UGC upon obtaining regulatory approvals.
As reported in siliconrepublic.com last week, Morgan Stanley will immediately commence discussions with the Competition Authority aimed at paving the way for UGC to gain control of the company. It is predicted that UGC will gain control of NTL Ireland within six to nine months.
UGC acquired Irish cable operator Chorus last year for US$55m. It is envisaged that if the company came to own NTL Ireland it could run into competition issues with the Competition Authority, which could end up drawing out the sales process by up to six months. Morgan Stanley’s negotiations with the Competition Authority will be aimed at offsetting such issues.
Informed sources have told siliconrepublic.com that UGC — with a war chest of €1bn for infrastructure and acquisitions — is planning to spend €200m on upgrading its cable infrastructure in Ireland to be capable of handling frequencies of up to 850MHz and beyond.
By upgrading existing cable ducting to fibre cable and deploying coaxial cable capable of carrying up to 850MHz from the street to the living room, sources suggest that the company could deploy broadband speeds of between 15Mbps and 30Mbps to the home, ideal for the triple play of television, broadband and voice that will define the communications market of the future.
Sources estimate that this could create a telecoms player capable of competing directly against incumbent operator Eircom. It is estimated that combined with fibre, coaxial cable is capable of carrying up to 50 times the amount of data currently handled on DSL copper.
Commenting on the sale of NTL Ireland to Morgan Stanley, the chief executive of NTL Ireland, Simon Duffy, said: “We are very pleased to have sold our division in the Republic of Ireland on these terms. This transaction reinforces our commitment to maintaining a clear focus on growing and improving our UK communications and content distribution businesses. I would like to thank everyone in NTL Ireland for all they have contributed and achieved over the past several years. They have built a strong business and we wish them continued success.”
It emerged also today that Morgan Stanley is currently in talks with NTL and Telewest about facilitating the merger of both companies into an international cable giant.
By John Kennedy