Dublin-based firm of solicitors, Arthur Cox, has been appointed as legal advisors to Telecom Eireann and RTE on their shareholdings and will work with British investment bank NM Rothschilds & Sons which was appointed financial advisor to both shareholders. The Sale of Cablelink should now take place by public tender before the end of 1998.
Rothschilds, whose appointment signals a strong overseas interest in Cablelink's cable TV and MMDS network in Dublin, Galway and Waterford, beat off competition from 17 other corporate finance houses into the shortlist of seven candidates interviewed by a special steering committee chaired by the Department of Public Enterprise to win the contract. Rothschilds has a lot of experience and contacts in the international telecommunications market and is a key advisor in the recently announced alliance between British Telecom and AT&T (see related articles). It was also the leading corporate finance house in the world last year in driving mergers and acquisitions in the telecommunications sector.
Cablelink was set up 30 years ago and is 75% owned by Telecom Eireann and 25% by RTE. Both semi-states have been instructed to sell their holding to facilitate greater competition in telecommunications. Analysts predict that the company could make £230 million balancing the cost of upgrading Cablelinks old cable network estimated to be a possible £150 million against very high penetration in the greater Dublin area of 330,000 subscribers valued at £1,000 per connected house (based on UK valuations). Also much of the value of Cablelink lies in the potential for its network to be used for telecommunications than the traditional TV channel business. It recently announced a major new initiative which will see it enter the Internet market and could see it become a dominant player in that industry (see related articles).
The Minister for Public Enterprise, Mary O'Rourke, is keen to Cablelink go to a company with a strong record in telecommunications record. The Sunday Tribune reported that more than 20 firms are interested in Cablelink according to company sources.
The Northern Ireland based subsidiary of British Cable Group NTL, who have just completed a £30 million, high-speed, Britain-Ireland fibre optic link, are one of the companies to express an interest. The company is expected to offer business telecommunications services in the Republic in September when the lines between Belfast an Dublin and Dublin and St. Annes, Lancashire are operational. Cabletel entered the market in Northern Ireland two years ago and has experienced enormous growth against BT having invested £600 million in a complete fibre optic network to service 80% of Northern Ireland by 2003. Cabletel has achieved a 40% take up of its television and television services with more than 50,000 phones have been connected and the fastest area of growth is interconnect with other operator passing their traffic through NTL Cabletel.
In a recent interview in The Irish Times Mr Owen Lambert, managing director of NTL Cabletel Northern Ireland, was reluctant to confirm the companies interest, but not so reluctant that he wouldn't do a half page interview entirely on the subject. Particularly on the unresolved regulatory issues facing a company trying to lay a high speed fibre optic network in a word access. How much protection will companies be given in laying cable would be the challenge facing the telecommunications regulator Etain Doyle.
Among those who have also expressed an interest in Cablelink is Cable Management Ireland, which operates cable franchises in many of Dublin's satellite towns, Esat Telecom who currently operate the second mobile franchise and have built a high speed fibre optic network in preparation for deregulation with CIE as a partner for access along its rail network, Princes Holdings who were recently embroiled in the Ray Burke controversy, Cable & Wireless and WorldCom.
Michael McMahon 13/8/98
