Liberty Media buys German networks
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Liberty Media, the US group controlled by the multi-billionaire John Malone, yesterday closed the 5.5bn euros (£3.5bn) purchase of six regional German cable networks from Deutsche Telekom.
Liberty will pay 3bn euros in cash, 1.5bn euros in stock and provide a further 1bn euros in senior secured notes. The deal cements Liberty's top position in the European cable sector, doubling its customer count to 20 million households.
The company is a 25.3 per cent shareholder in Telewest and along with Microsoft, exercises operating control. Liberty is also the controlling shareholder in United Pan-European Communications.
The deal is conditional on clearance by the European Commission and Germany's cartel office. The terms of the deal are thought to contain undisclosed opt-out provisions allowing either side to withdraw should market conditions change substantially.
The sale will help Deutsche Telekom pare its 65bn euro debt mountain to around 50bn euros by the end of 2002. The telecoms giant is expected to raise a further 10bn euros from the partial float of T-Mobil, its wireless division.
Many industry watchers believe Mr Malone has secured a bargain. Recent US cable deals have valued subscribers at nearly $5,000 each, a figure nearly ten times that paid by Liberty Media yesterday.
It is clear that Liberty will need to spend billions of euros to update the German networks. The current system is not configured for telecoms traffic and is not suitable for high-speed internet access – both of which are key drivers of customer revenue and asset values.
The deal is nonetheless a major milestone in Mr Malone's plan to build Europe's first trans-continental, integrated cable system. Though most of DT's cable networks have now been sold, Liberty may remain an acquirer of content providers.
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