NTL, the US communications group which recently acquired Cablelink, is to become the dominant cable operator in Britain following an agreement announced yesterday with Cable and Wireless, the UK telephone group.
The Nasdaq-listed company is buying CWC's residential cable assets for a total of $12.9 billion in cash and debt. France Telecom will help to fund the investment by injecting $5.5 billion into NTL in return for a 25 per cent stake in the enlarged company - the first time one of Europe's former telecoms monopolies has invested directly in the cable industry.
In the long-awaited consolidation of the UK cable industry, Cable & Wireless Communications, the long distance and residential cable operator, was divided up in two deals with a combined value of almost $23.7 billion.
At the same time, Cable and Wireless marked its transformation into an international business telephony group by taking full control of CWC's long distance and business customer base. C&W is buying out the 47 per cent of CWC it does not own in a transaction valuing the business at £6.5 billion sterling ($10.2 billion).
The agreement is a victory for NTL over Telewest Communications, the third largest UK cable operator which was its principal rival for the CWC assets.
NTL is offering to buy CWC's residential business for 54.4 million new NTL shares, £2.85 billion in cash and £1.9 billion in assumed debt. Analysts hailed yesterday's agreements as broadly positive shares in both C&W and CWC fell amid concerns that the deal will not be completed until the beginning of next year.
