NTL Inc. has purchased from British Telecommunications PLC two cable franchises in key British markets, and plans to upgrade the networks for digital cable, interactive services and high-speed Internet access, it said in a press statement.
The two franchises, located in Westminster, central London, and in Milton Keynes, just north of London, cover about 210,000 homes, most of which are passed by broadband networks, NTL said. The Westminster franchise, in particular, is viewed by analysts as important because of its affluent population and the fact that many of the country's decision-makers live within the franchise.
NTL will pay BT 5 million pounds (US$7.8 million) when it closes the deal, and another 14 million pounds when the Westminster network upgrade is completed. NTL will also pay annual lease payments of about 3.9 million pounds.
The deal is important because it helps NTL come closer to its stated goal of consolidating the U.K.'s fragmented cable market. Currently, few cable franchises in the U.K. offer broadband Internet service, although many do offer voice telephony services over the copper wiring that was laid with the original cable. NTL's upgrade will mean that a significant number of cable customers will now have fast, always-on cable Internet access.
France Telecom SA announced on Thursday that it would acquire a US$1 billion stake in NTL in an effort to help it consolidate its market share in the U.K. telecommunications arena. [See "France Telecom to Buy US$1 Billion NTL Stake," July 15.] That investment was billed by France Telecom as a way to give NTL the financial wherewithal to buy the consumer division of Cable & Wireless Communications PLC (CWC). Today, in a separate statement, NTL announced that it has entered into exclusive negotiations to merge with CWC's cable and consumer telephony business.
If that deal is concluded, France Telecom will increase its approximately 10 percent equity stake in NTL created by last Thursday's deal.
In January, Microsoft Corp. also invested US$500 million in NTL in an attempt to help it develop broadband services for customers in the U.K. and Ireland.