Chorus, the cable and telecommunications company jointly owned by Independent News & Media and Liberty Media Corporation, the US entertainment group, is in talks with NTL to buy its operations in Galway and Waterford. NTL, the largest cable company in Ireland, announced this week that it was freezing its digital television plans, citing higher-than-expected costs. The sale of its operations outside Dublin could fund the upgrading of its Dublin network.
Both groups have already had preliminary discussions about the sale of NTL's licences to broadcast television signals by microwave in Galway and Waterford. It is understood that Chorus now wants to extend the talks to include NTL's cable network in the two cities.
A price tag of £20 million (€2.54 million) has been put on NTL's microwave distribution licences, which cover 20,000 homes. The company has roughly the same number of cable customers in the two cities but the networks have not been upgraded to carry digital television signals and high-speed Internet.
The value of the cable networks is unclear but last March, Chorus - then called Irish Multichannel - paid £15 million for Suir Nore Relays, a cable company with 20,000 subscribers in the Tipperary/Kilkenny region.
NTL met Ms Etain Doyle, the telecommunications regulator this week, to explain the decision to halt the roll-out of its £350 million plan for digital television. Mr Ian Jeffers, the managing director of NTL Ireland, explained that the Irish operation lost out in competition for funds with other parts of the cash-strapped NTL group.
The sale of NTL's operations in Galway and Waterford could raise up to £50 million to fund the upgrading of its network in Dublin. "They might not be worth that in a forced sale," cautioned one source yesterday.
NTL will be under pressure to look seriously at any approach from Chorus, as the regulator has warned the company that it could lose its exclusive rights in Dublin, Galway and Waterford if it does not meet the roll-out terms set in its licences.
An end to exclusivity would allow Chorus to move into these markets from the surrounding hinterland where it currently operates. NTL may seek to have the deadlines for the roll-out of digital services extended and agreement from the regulator to charge higher than anticipated prices for new services.
Chorus is not without its own problems. Sources at the company admit that some aspects of its digital television roll-out plan are delayed. Problems have been caused by a shortage of suitable contractors and delays in obtaining permission to carry out necessary work, particularly in Cork. The company has diverted resources into the conversion of its microwave network to carry digital television and this part of the roll-out is ahead of schedule.
Sources at Chorus say that funds are not an issue following the arrangement of a €360 million loan facility last August.
