[Merged]Pipex for Sale - VM interested?

[Paul K]

Originally Posted by Nikesh

Seems odd to me that Virgin Media keep trying to expand their ADSL part of the company when they are always advertising having superior cable lines which aren't affected by how far you live. I think they should spend the money on expanding cable around the UK.

Not odd at all if you think about it. The UK is not fully cabled and many areas have no cable access, whereas thanks to an OFCOM mandate when BT privatised most of the UK has a telephone line.

Originally Posted by Nikesh

Seems odd to me that Virgin Media keep trying to expand their ADSL part of the company when they are always advertising having superior cable lines which aren't affected by how far you live. I think they should spend the money on expanding cable around the UK.

Originally Posted by Paul

Not odd at all if you think about it. The UK is not fully cabled and many areas have no cable access, whereas thanks to an OFCOM mandate when BT privatised most of the UK has a telephone line.

Furthermore, there's the cost aspect. Cabling streets costs a fortune and simply isn't viable while VM is still coping with the combined, restructured debt of its constituent parts (NTL, Telewest and C&W, plus all the operations they between them bought up over the years).

Expanding services onto the BT network incurs marketing and usage charges, which can be met as revenue spending, but very little capital investment.

In a stock-market driven economy, it is not enough for a plc to simply be good at what it is already doing. It is obliged to continually grow and expand to 'enhance shareholder value'. VM is in a bit of a bind because it's known as a cable company, yet cable is just about the only thing it can't afford to do at the moment.

I don't think it is any coincidence that the new name for the company makes no mention of the word 'cable'. They are pushing themselves as a total communications company - Virgin *Media* - and will be looking to exploit as many different means as possible in order to meet their obligation to grow and expand over the coming years. One of the reasons VM's interest in Pipex is significant is, as others have already observed, the fact that Pipex has one of only two WiMAX licences issued in the UK. The attraction of being able to blanket cover an uncabled neighbourhood with a wireless signal rather than miles and miles of cable is obvious, especially when you already have a national infrastructure sitting there waiting to plug it into.

I think we will only see large-scale cabling in the futre *if* VM can turn around its lingering debt mountain and *if* at that time cable is still the most effective means of delivering the services it wishes to provide.

Update on Pipex sale. Both VM & Sky have cooled on purchase. See link


http://business.timesonline.co.uk/to...cle1594153.ece

Update on Pipex sale. I have just read in Mail on Sunday that BT have now also pulled out of Pipex sale (along with Sky & VM) which leaves only Carphone Warehouse as potential bidder. It seems the sale price is to high.