Cable fable

28 January 2003

By letting a consortium take its remaining cable businesses for E1.7bn, DT has lost 70% compared to Liberty Media’s offer of a year ago. DT has saved face with an earnout clause. But the buyers have definitely achieved a keen price.

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Deutsche Telekom has sold its remaining cable assets to a private equity consortium composed of Goldman Sachs Capital Partners, Apax Partners, and Providence Equity, subject to financing and regulatory approval. DT is to receive E1.725bn in cash, with an extra E375m linked to the value of the businesses in the future. The buyers are being financed with a fiveyear loan from Morgan Stanley and Goldman Sachs.

The purchase prices compares with a guidance range of E2bnE2.3bn given in DT's most recent debt reduction plan, and with a E5.5bn offer DT received from Liberty Media in 2001. The Liberty bid was ruled out by the German competition regulator.

DT is seeking to sell assets in order to reduce its E64bn of debt towards a target of E50bn by tyhe end of 2003. The six cable franchises are in Hamburg/SchleswigHolstein/MecklenburgVorpommern, Niedersachsen/Bremen, Berlin/Brandenburg, Sachsen/SachsenAnhalt, RheinlandPfalz/Saarland, and Bayern. Only the Berlin/Brandenburg franchise has been upgraded to broadband standards.

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