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NTL acquires CWC cable unit

Two left, only Telewest to go

Two years ago the UK had 24 cable operators. But now there are only two, following today's news that NTL is to acquire the cable television interests of Cable & Wireless Communications for £8.2 billion in cash and stocks. Meanwhile, Cable & Wireless, owner of 53 per cent of CWC, is buying out the data and business divisions, with its own shares, valueing this part of the business at £5.3 billion The upshot is that CWC, accounting for 24 per cent of Cable & Wireless turnover is dismembered; NTL becomes by far the most important cable operator in the UK, with customers in 2.8 million homes; and Cable & Wireless gains full control of CWC's 117,000 business customers. Post deal, it will also control up to 12.4 per cent of NTL. Indications are that this is a passive stake - Cable & Wireless promises to retain its holding for at least a year. The end game for the British cable industry could be only months away, with confirmation that New York-listed NTL is also wooing Telewest Communications, the UK's other remaining operator. That would give it near national coverage as a telco for consumers. NTL is also positioning itself as a credible contender in the new world of consumer broadband multimedia services, lining up against BT and BSkyB in the UK. The company has secured two big name backers -- France Telecom and Microsoft -- in its rush to create a British cable monopoly. France Telecom is by far the more important backer, in cash terms. It is underwriting the CWC take-over by pumping in $5.5 billion for up to 25 per cent of NTL. France Telecom already owns ten per cent of NTL. Microsoft operates an investment portfolio in several cable operators, including a small stake in NTL, but it disclaims any ambition to run its own cable operator. It is keen to establish its technology as the de facto set-top standard for cable TV. ®

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