Virgin 'to sell' business division

[Media Boy UK]

Virgin Media is planning to raise up to £600m by selling off its NTL:Telewest business communications unit, according to The Times.

The paper reports that the company is keen to sell the asset in order to focus on its residential cable television, broadband internet and telephony services. It is understood that Virgin Media's advisers at Goldman Sachs prepared a plan to combine the business unit with Thus, which is now being acquired by Cable and Wireless.

http://www.digitalspy.co.uk/digitalt...-division.html

Info from Digital Spy & The Times.

[Raistlin]

Ummm.....

Actually, it would probably be best if you just posted the 'more' at the same time as the thread title

[Media Boy UK]

I was just testing out an new way of breaking news (Like Teletext do)

[Pierre]

This has been on the cards for some time, and has been posted on here several times only

A report in April this year by Credit Suisse advises that sale of the Business Division could be a possibility.

I haven't see the article in the times but knowing lazy journos they are probably reporting on something that was issued 4 months ago.

VMED could unlock at least $1/share by selling its business division. Our assumptions are
that the business division could be sold at 7.0x EV/EBITDA, the business would be pulled
out of VMED at 5.0x EBITDA, the buyer would have a 15% margin in the business (vs
VMED’s 40% margin), and 25% of revenue would come back to Virgin through a network
contract with the buyer. There is additional upside from network revenue growth as the
buyer of the asset grows the business and also if the deal involves a broader network
relationship whereby VMED would become a tier 1 partner. The network contract would be
essential to the deal because the business operations leverage the same network as the
consumer business and, therefore, the physical network could not be separated and sold
with the business division. We view the most obvious potential acquirors of this asset as
Cable & Wireless and Thus.

[Kymmy]

Perhaps if it does then we might get better speeds, true fixed IPs with rDNS and as demon don't limit thier business usage no more talk about STM.

But then again that flying pig is about!!!!

[tvtimes]

I would have thought this was always on the cards considering they didn't rebrand the business sector too. It was very strange how they almost kept it as a seperate entity.

So they want to concentrate on residential aspects of the business? That can only be good news. £600m is a lot of money and if they manage to sell off their UKTV arm aswell, well they stand to make a ridiculous amount of money from that too. They might use the money to upgrade areas stuck in the dark ages! Here's hoping! Or they might invest it in other areas like IPTV or customer services etc who knows but they must be trying to free up some capital for something!

[Kymmy]

But I would have thought that the business sector is more profitable...

They're charging £47 for a 10mb connection which runs through the same network as the residential side, the only difference being the choice of sticky IP's and the 6 hour SLA

Kymmy

[dev]

Originally Posted by Kymmy

But I would have thought that the business sector is more profitable...

They're charging £47 for a 10mb connection which runs through the same network as the residential side, the only difference being the choice of sticky IP's and the 6 hour SLA

Kymmy

altho business would bring more revenue, the costs are probably more (ignoring traffic costs)

as for the sale: what happens to the business customers in terms of connectivity? aren't some on the same ubr's as residential customers etc?

[Chrysalis]

seems a bad move to me, the business division makes more profit compared to costs and turnover, but VM thinking short term for quick boost of cash but reduce their profits in the long term.

[Nedkelly]

Is there anything else they can sell .Ex ntl were stripped the bone i think its a bad move myself

[piggy]

its just another asset stripping exercise

[Nedkelly]

What will happen to the staff ?

[Arthurgray50@blu]

It would not surprise me one bit, if it wasn't Sky, there was a strong rumour a couple of months ago, that they offered £600 million for it, therefore it could, then they could go for the kill, and get the whole lot, don't forget, a thread l started last month, that they were running tests on cable boxes, l believe in Swindon.

[AtW]

As a Telewest business line I hope this crap won't happen - the service is good and so are speeds, I can't see any other ISP who may take over to offer anything better.

I just wish NTL never bought Telewest. No - I wish Terminator 4 went back in time and shot anyone involved in creating NTL int he first place.

[Pierre]

Originally Posted by Chrysalis

seems a bad move to me, the business division makes more profit compared to costs and turnover, but VM thinking short term for quick boost of cash but reduce their profits in the long term.

It's simplistically outsourcing the Business division. VM get a big cash handout and also lose several hundred people of their books, and all associated costs.

VM aren't selling any Network, so their not selling any fixed assets, what they are doing is selling their order book. Any buyer would have to then pay VM for using their Network.

The risk is, over time, if they sell to C&W or Thus, is either carrier migrating services over to their own Networks. They'll be able to move the backhaul over to their own Core Network.

Whatever the answer it will be complicated, as the business division cannot just be ripped out from VM as it integral to the Network.

Also there would be nothjing stopping VM from starting a new Business Division after they've sold the old one.