International media group TCI has said it will bid for Cablelink if certain key issues regarding the terms of the cable company's licence are resolved.
TCI executive vice-president, Ms Miranda Curtis, said TCI, which is now one of the three main players in the cable industry in Britain, will lead a consortium to bid for the Irish company. However, its interest depends on an exclusive period of operation and automatic renewal of the Cablelink licence, she added.
Potential bidders for Cablelink, which enjoys an almost exclusive franchise in Dublin, were understood to be taken aback last month when the Office of the Telecommunications Regulator (ODTR) published a consultation paper specifically ruling out monopolies. It also promised that in future cable companies would compete with each other.
Ms Curtis, whose company is a 50 per cent shareholder in Princes Holdings, with Independent Newspapers holding the remainder, said any investor would need exclusivity for at least five years before another competitor could enter that market. She added that a 10-year exclusivity would be more preferable.
Ms Curtis said it would cost at least $150 million (£98.3 million) to buy Cablelink and upgrading the infrastructure would cost a further $150 million. "It will be at least seven years before an operating profit could be turned on those figures," she said.
Ms Curtis pointed out that to grant the funding necessary, banks would have to be satisfied about the terms of the licence and the length it would run. The value of Cablelink depended very much on clarifying the terms of the licence.
She said if successful, TCI - which would bid for Cablelink as part of a consortium, including Princes Holdings - would provide a full range of services. This would include telephony, Internet, home shopping, video on demand.
She argued that TCI would be able to provide a full national service through its link with Princes Holdings. Princes has 160,000 subscribers around the State. This added to Cablelink's 340,000 would give the group more than 500,000 customers.
As well as Dublin, Cablelink operates in Galway and Waterford and Ms Curtis said it could link all major cities in the Republic through a fibre-optic ring.
TCI provides programming services and operates television, telephone and Internet distribution networks around the world. Its parent company, TeleCommunications Inc, supplies cable services to more than 16 million customers in the US.
Ms Curtis said the TCI consortium could offer Cablelink customers very attractive packages, including access to 22 cable channels, which it already supplies to BSkyB subscribers in Britain.
It could offer economies of scale in a range of sectors, including marketing, distribution and purchasing. This could entail buying items such as fibre cable, at extremely competitive price, Ms Curtis said.
TCI increased its stake from 25 per cent to 50 per cent in Princes, by buying out United International Holdings (UIH) in a deal valued at £17.4 million. Ms Curtis said it was "a nice business, but it is very small as a long-term business". She added Princes would need considerable investment in the future if it were to provide full digital services. She declined to put a figure on it, but industry sources say for a company such as Princes investment in excess of £60 million could be required. Meanwhile, an Information Memorandum will be issued to potential bidders for Cablelink once the ODTR clarifies the future licensing regime. Bidders will then prepare initial indicative bids and a shortlist will be selected. This will be followed by a due-diligence process by each of the bidders, followed by negotiations to conclude a sale.
The Minister for Public Enterprise, Ms O'Rourke, said recently that the process was expected to take three to four months from the issue of the Information Memorandum.
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