American investors expect cable operators NTL and Telewest to merge in early 2005,creating a combined front in the increasingly competitive digital TV market.
Both of Britain’s leading cable companies are in large amounts of debt after the installation of the cable network in the UK and faced with bankruptcy they were forced to restructure. The proposed merger is expected to start as soon as NTL has finalised sales of its £1.2 billion masts business and Telewest has completed its £1.7 billion refinancing, according to reports in today’s
Guardian.
The consolidation of the two companies would create a group able to compete more effectively against BSkyB, the leading pay television company in the UK and Freeview, the BBC supported digital system.
Asked by investors at a UBS conference about his reaction to the rumours, Jeremy Darroch, chief financial officer of BSkyB said: “In the short term, it might not be a bad thing…there could be significant disruption of putting those two companies together.”
Investors believe that the union of the businesses would be 60:40 spilt in favour of the larger NTL, although official confirmation of merger proceedings has yet to be given by either company.
The rumours come less than a month after NTL announced the sale of its broadcast business to a consortium led Macquarie Communications Infrastructure for 1.27 billion. Simon Duffy, chief executive for NTL told investors that the overall focus with the money gained from the sale would be to: “maximise the shareholder value.”(see NTL To Sell Broadcast Business For £1.27 Billion)
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