France Telecom pays $1bn for 10% of NTL
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Your support makes all the difference.FRANCE TELECOM last night agreed to pay $1bn (pounds 640m) for a 10 per cent stake in NTL, the number three cable network operator, and is prepared to invest "a few billion dollars" more to back a cash and stock bid for the residential cable assets of Cable & Wireless Communications (CWC), the number one operator.
Should the bid succeed, Jean-Louis Vinciguerra, executive vice president of finance, also said France Telecom would enlarge its NTL holding to become the largest shareholder, but would stop short of having a majority stake.
"We will have to add a few billion dollars to the first $1bn" if NTL's offer for CWC's residential cable business succeeds, he added.
France Telecom has $3bn in cash reserves, but is willing to borrow additional funds. "A few billion dollars is not a key issue for France Telecom," said Mr Vinciguerra. The French company has a 2 per cent stake in Deutsche Telekom, worth $2bn, that it intends to sell.
The bid battle over CWC further intensified last night when sources close to Telewest, the country's second-biggest cable operator, said talks with CWC, begun in the spring, were "quite far advanced" and could result in a deal by next week.
It emerged that Telewest's biggest shareholders, Microsoft with a 29.9 per cent interest and Liberty Media with 20 per cent, are prepared to provide cash to conclude a deal. Microsoft has balance sheet reserves of $20bn, while Liberty, now part of AT&T, has a $5bn cash war chest.
Mr Vinciguerra refused to confirm reports that NTL would bid pounds 8bn for the CWC assets, comprising pounds 6bn in cash and shares, and the assumption of pounds 2bn in debt. "(NTL) has very strong and aggressive management," he said, commenting on why France Telecom is backing Barclay Knapp, the chief executive of NTL. "The idea for France Telecom is to have access to the second local loop," he added, referring to the line that connects homes and businesses to telephone companies' trunk network. "It's exactly what AT&T did in the US when it bought cable companies."
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