A powerful force was created today when cable giants Cable and Wireless, Nynex and Bell Canada announced an agreement to merge their UK subsidiaries and affiliates into one company. Called Cable and Wireless Communications, the new UK group will include Nynex Cablecomms, Bell Cablemedia, Videotron and Cable and Wireless subsidiary Mercury Communications.
Although yet to be finalised, the deal will see Cable and Wireless Communications offering a choice of services direct to businesses throughout the UK and to approximately six million franchised homes. The new company is set to provide local, national and international data and mobile telecommunications, together with multi-channel television and Internet services. Officials said this was the first time one provider has offered UK customers such a comprehensive range of services over a single network.
Richard Brown, chief executive of Cable and Wireless, said: ?This is a tremendous breakthrough. Cable and Wireless Communications will offer multiple services that until now people had to get from different providers. It will be the only company in the UK capable of offering a combination of telecomms, broadband, data transmission, video shopping and Internet access.?
?It[the agreement] sounds good for UK consumers, insofar as someone has to present a challenge to BT. The problem is that being one of the most deregulated telecommunications countries in the world, the UK is throttled by a lack of investment in research and development," said John Sniadowski, senior analyst at Bloor Research. ?Companies like BT are sitting on the fence saying they haven?t got the revenue to fund these sort of projects. This merger should spur them into action.?
Under the terms of the deal, Cable and Wireless Communications will be 52 per cent owned by Cable and Wireless, 18 per cent by Nynex and 14 per cent by Bell Canada. Cable and Wireless Communications is intended ultimately to hold 100 per cent of Mercury, Bell Cablemedia, Videotron and Nynex Cablecomms.
It also emerged today that Cable and Wireless has taken a #250 million stake in Bell Cablemedia, which in turn is taking control of Videotron. Bell Cablemedia currently holds 26 per cent of Videotron but announced today that it has entered into conditional agreement to acquire a further 56 per cent. The acquistion of Videotron is expected to give Bell Cablemedia ownership of franchises covering some 3.2 million homes, including the leading position in the London market and and major franchises in the North of England, East Anglia and on the South Coast of England. The acquisition of Videotron is being financed from the proceeds of Cable and Wireless?s investment.
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