Britain’s biggest cable operator, ntl, is engaging in talks with AOL Time Warner, Liberty Media and Microsoft, in an effort to find badly-needed new investment. Talks are said to be at “an early stage”. However, all three parties mentioned are understood to be interested in ntl, although it is likely any new investor would wait until a bond restructuring on ntl’s outstanding debt (in the region of £4.2bn) had taken place.
Britain’s biggest cable operator, ntl, is engaging in talks with AOL Time Warner, Liberty Media and Microsoft, in an effort to find badly-needed new investment.
France Telecom, one of ntl’s biggest backers, has also talked with the French media company Vivendi Universal about investing in ntl – but Vivendi is now thought to be the least interested of all potential investment candidates, according to the FT.
The talks are understood to have begun late last month, and are said to be at an early stage. However, all three parties mentioned are understood to be interested in ntl. Microsoft, for example, already has a stake in ntl, and is gradually building on its investments in continental Europe. Whether or not it wishes to expand on its presence in the UK market remains unclear, although it does hold a stake in the UK’s second largest cable operator, Telewest. Liberty Media is also a Telewest stakeholder, and may wish to expand on its UK investment base; John Malone, the US cable tycoon, is understood to want to mirror his US success in Europe. There has been some evidence of this recently, with Liberty having launched a rescue plan for European cable operator UPC. AOL Time Warner has also shown some limited interest in an ntl investment in the past, but was put off from sealing a deal by ntl’s huge debt mountain – and therefore may be unwilling to invest at the present time when ntl still has a barely-manageable £12bn worth of debt.
It is likely that any new investor would wait until a bond restructuring on ntl’s outstanding debt (in the region of £4.2bn) had taken place. ntl was expected to make an announcement on this on Thursday, but this failed to materialise, leaving investors wondering quite what was going on. The price tag for a new investment – the FT says around $2.5bn, approximately £1.7bn, to cover some of the oustanding debt and provide an equity injection. This is a high price for any potential investor to pay, particularly when effects of the much-discussed economic slowdown continue to have an impact on companies in the US and Europe.
Investors are continuing to await a revised business plan for 2002 from ntl, to show how it intends to stave off bankruptcy and avert a cashflow crisis. Until this arrives, confidence will continue to slide.