Unprecedented Auction of UK Cable and Mobile Assets on the Horizon

Strategic Insights -

An unprecedented multibillion-pound auction of UK cable and mobile telephone assets is likely if AT&T's hostile bid for MediaOne succeeds, forcing the sale of AT&T's stakes in Telewest and One 2 One. AT&T's bid, valued at $58 billion, would require the sale of its 51.5% stake in Telewest, a cable group capitalized at about £5.6 billion, and its 50% stake in One 2 One, a mobile telephone operator valued at up to £11 billion. The sale would create a frenzy of bidding, with obvious candidates including Cable & Wireless Communications and NTL, the two other large cable groups in the UK.

Key Takeaways:

  • AT&T's hostile bid for MediaOne, valued at $58 billion, is likely to result in the sale of AT&T's stakes in Telewest and One 2 One.
  • The sale of Telewest, capitalized at about £5.6 billion, could attract big continental European players who have wanted to enter the UK market for some time.
  • Cable & Wireless Communications and NTL are the most obvious candidates to bid for Telewest, with CWC already in discussions with Telewest over a merger.
  • The sale of One 2 One, valued at up to £11 billion, would create a frenzy of bidding, with Cable & Wireless Communications and NTL likely to be among the bidders.
  • AT&T's bid for MediaOne represents a premium of about 20% or $9.8 billion over an existing offer for MediaOne by Comcast.
  • The sale of MediaOne's international arm could total between $18 billion and $20 billion.
  • The deal could overstretch AT&T, which has already acquired cable group TCI.

Statistics:

  • AT&T's bid for MediaOne is valued at $58 billion.
  • Telewest is capitalized at about £5.6 billion.
  • One 2 One is valued at up to £11 billion.
  • AT&T's offer of $87.375 a share for MediaOne represents a premium of about 20% or $9.8 billion over Comcast's offer.
  • The sale of MediaOne's international arm could total between $18 billion and $20 billion.
  • AT&T's shares fell in early trading in New York by $3.5 at $53.25 amid fears that the deal could overstretch the company.

Sources:

  • "Telegraph" (date not specified) - "MediaOne: AT&T's 'Hostile' Bid".
  • "The Times", Copyright (C) 1999 - "Unprecedented Auction of UK Cable and Mobile Assets on the Horizon".