European cable giant UGC has agreed with investment bank Morgan Stanley to buy NTL’s Irish subsidiary, depending on regulatory approval from the Competition Authority for €329m. Morgan Stanley last night completed its acquisition of NTL Ireland for €325m through its affiliate MS Irish Cable Holdings.
The total purchase price is approximately €325m excluding an adjustment for cash in the business at closing, plus a €4m arrangement fee and reimbursement of certain expenses and costs of Morgan Stanley incurred in connection with MS Irish Cable Holdings BV’s acquisition and ownership of NTL Ireland and Morgan Stanley’s sale of MS Irish Cable Holdings BV to the relevant UGC affiliate.
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 full control of NTL Ireland within six months.
According to various reports, UGC, which acquired another Irish cable company Chorus for €55m last year, is anticipating possible lay-offs of a number of NTL staff following the successful completion of the merger of Chorus and NTL following regulatory approval.
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. Sources indicate 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. It is then envisaged that UGC will offer Irish homes ‘triple play’ services such as 20Mb to 30Mb broadband, television and telephony services.
NTL Ireland is the largest cable operator in the Republic of Ireland, offering cable television and broadband services to residential customers and managed network services to corporate customers. On December 31, 2004, NTL Ireland had approximately 355,300 revenue generating units (RGUs) including 347,800 digital and analog video RGUs and 7,500 broadband internet RGUs.
Commenting on UGC’s agreement to buy NTL from Morgan Stanley, Mike Fries, president and CEO of UGC said: “We are pleased to announce this transaction in the Republic of Ireland, one of the fastest growing economies in Western Europe.
“NTL Ireland is a leading pay-TV provider in Dublin, Galway and Waterford and is well positioned to participate in the rapid growth of broadband services. The purchase price represents a multiple of approximately 8.6 times the estimated 2005 operating cash flow at the system level.
“We also anticipate significant synergies from combining the NTL asset with our existing Chorus business. In the meantime, we look forward to working with Irish regulators to get the transaction approved as soon as possible,” Fries said.
By John Kennedy