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NTL Quits Australia, Keeps Asian Segment

By | February 27, 2002

      Debt-strapped satellite, transmission and cable company NTL is quitting Australia, selling out its 578 towers to Macquarie Bank for A$850 million (US$439 million) in cash. NTL bought Australia’s National Transmission Network (NTN) in March 1999 for GBP250 million (A$650 million/US$360 million). The sell-off realises hard cash for NTL, but also removes a profitable division which last year generated EBITDA of A$52 million (US$27 million) on revenues of A$119 million (US$61 million). Out of the sale proceeds NTL will redeem local debts of A$227 million (US$117 million).

      NTN is Australia’s largest broadcast spectrum provider and distributes TV and radio programming for the ABC and SBS national networks. NTL Australian business comprises two entities: NTL Australia Pty. Ltd. and NTL Telecommunications Pty. Ltd. Macquarie Bank said the transaction would not affect the day-to-day business operation, and all 118 staff would be retained with selected management joining the Macquarie staff. Macquarie will also maintain a long-term technical services agreement with NTL to ensure continuity of service for Australian customers. NTL CEO Barclay Knapp said the company had doubled the Australian business’ revenues, and had elected to sell the network as part of a broader restructuring.

      Meanwhile, life goes on for NTL’s recently appointed managing director for South East Asia, Patrick Duffy. While satellite-based connectivity is not Duffy’s core business, he says NTL is in the region for sound commercial reasons: “We have a business based in Singapore and in Bangkok (Thailand) and Kuala Lumpur (Malaysia). Basically, we are looking for ‘design and build’ contracts for broadcasters. In essence it is the same business we have in the UK, looking after studio infrastructure as well as their transmission business.” NTL’s model is to build the facility and then hand it over to the broadcaster.

      Duffy says in his local market the broadcaster traditionally owns and operates not only the studios but the complete transmission system. “Increasingly, however, we are finding broadcasters are willing to consider outsourcing a transmission that’s owned and operated by a third party.” Duffy says part of this is the obvious pressure on a TV station’s finances, but also a realisation that transmission need not be a core part of their business. “Broadcasters want to get the best value out of their content, and have someone else look after the transmission.”

      Duffy admits that NTL’s regional plans have progressed slower than initially expected. He says it has had success with Malaysia’s NTV7, where it has a 10-year build, operate and maintain contract. “This is the model we are looking to build upon throughout the region.” He cites the region’s economic problems as one reason for the slow progress, but also concedes NTL’s domestic problems have not helped with its plans for the region. “But more than either of these, is the region’s move to digital. This has not happened in this region as fast as elsewhere. We get the distinct impression that they are waiting and watching at what happens [with digital] elsewhere.”

      He says Asian TV broadcasters can hardly be blamed for being cautious when commercially other digital multiplexed operations have performed so badly. NTL built the digital platform for TV Mobile in Singapore, where digital signals are sent to some 1,600 buses throughout the island country. “TV on buses is a wonderful concept and for travellers it is simply wonderful, but content has to be tailored for its audience with shorter programmes and more relevant content.”

      While declining to be specific, Duffy says the Singapore contract and other contracts in the region have led to strong revenue increases over the past few years. “We would expect to do this again this year.” Duffy sees increased business opportunities in Thailand and Malaysia this year, as well as in Brunai and Vietnam. He is also keeping an eye on the Chinese mainland. “We are very much concentrating on those regions where we have a presence, although every company is looking at the huge market that is China. But China is such a huge country that anyone winning business there would have to make a conscious decision to follow up with serious investment.”

      –Chris Forrester

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