Cablelink will have a new owner by next November, it has emerged. The price tag for a majority stake could be £120-140 million. Telecom owns 75 per cent of Cablelink and it is this shareholding which will be sold. The Minister for Public Enterprise, Mrs O'Rourke, will bring a memorandum to Cabinet on Tuesday on the proposed sale and the timetable for its disposal. It is expected that the Cabinet will give the go-ahead to the sale this month and the stake will then be put out to tender. RTE holds the remaining 25 per cent shareholding and is keen to retain it.
It is thought that several members of the Cabinet want RTE to divest its stake and sell Cablelink, which provides piped television services to more than 340,000 homes in Ireland. However, RTE sources said they had been given no indication that they would be asked to divest.
It is understood that the tender process will take about two months and consultants will be appointed to oversee it. Bids are expected to be received in August and September. These will be assessed in October.
Cablelink needs an investment of around £120 million to upgrade its services to enable it to offer broadband capability, including facilities such as telecommunications services, Internet services, home shopping and video on demand.
Mrs O'Rourke is known to be concerned that Telecom has not developed the service, despite numerous promises to do so. Telecom's purchase of Cablelink was seen by competitors as purely defensive. They contend that Telecom would never develop it for telecommunications and offer it to outsiders as this would amount to facilitating others to compete against Telecom.
It is believed that the sale is being fast-tracked to enable investors to have the service upgraded in time for the fully liberalised market in telecommunications which will occur on January 1st, 2000.
Keen interest is expected from a number of groups including cable companies in the US. Those being tipped to tender include the giant US media group Time Warner, which previously expressed an interest in Cablelink, and Cabletel which has operations in Northern Ireland. WorldCom, Esat and Stentor, who yesterday officially ruled themselves out of the race for the third mobile phone licence, are expected to at least take a look.
The monies raised from the sale will go into Telecom Eireann's coffers. Although some sources question the amount of investment needed, Cablelink is seen as a very valuable asset, given its presence in cities such as Dublin. It has also performed well financially. Figures to April 1997 show Cablelink made a post tax profit of £3.3 million on a turnover of £33 million. Its operating profit was £4.7 million and there is retained profits of £21 million.
