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Telenet accelerates broadband lead as Callahan Associates invests in Flanders future
Telenet, the Belgian communications company, today announced that its shareholders have signed an agreement with Callahan Associates, the global communications development and operating company, to sell a majority stake in Telenet.
The current shareholders of Telenet have agreed today to sell to Callahan Associates 54.2 percent of their stake in Telenet. Telenet is valued at 74bn Bef, Euro 1,842 million. Furthermore Telenet has agreed to issue warrants that give Callahan Associates the right to increase its stake with a further 19.9 percent at the same valuation.
Callahan Associates will work with Telenet shareholders to deliver advanced communications services to customers in the region upon closure of the deal expected before the end of the first quarter.
Telenet is very pleased to have Callahan Associates on board as a Telenet shareholder and operating partner. As a recognised leader in the provision of broadband services, Telenet can enhance the execution of its aggressive growth strategy and work towards the delivery of advanced broadband services. Callahan Associates experience in the development and management of cable operations throughout Western Europe makes them the ideal partner for Telenet, particularly at this evolutionary phase of the development of the company.
The current shareholders will now own 45.8 percent of the new holding company: mixed CATV inter-municipalities 13.95 percent, pure CATV inter-municipalities 7.42 percent, GIMV 12.21 percent and the Financial Consortium 12.21 percent Callahan Associates will own 54.2 percent.
An offer has also been made by Callahan Associates to the mixed intermunicipalities to acquire 53.5 percent of their cable tv activities. They are valued at 38bn Bef – Euro 934 million. A decision by their boards of directors is expected within 10 days and the decision of the city councils on the acceptance of this offer is expected to be made no later than early June 2001, after which the offer will expire.
If the integration of the mixed cable TV inter-municipalities is approved by the city councils the integrated Telenet will start the preparation of IDTV. Telenet plans to launch IDTV (interactive digital TV) in Flanders in 2002. Flanders intends to become the region with the highest IDTV penetration in the world.
There are 16 municipalities within the Flanders Region. The sale of the Mixed intermunicipalities represent 10 of these. The remainder will maintain their ownership.
The Public sector of the mixed intermunicipalities and Telenet agreed on the role of the public sector shareholders of the mixed cable companies after the integration in Telenet. The agreement includes specific elements for arrangements relating to digital roll-out, the involvement in program councils and the provision of certain public services. Callahan Associates intends to work with all 16 municipalities on the introduction of Digital TV.
Callahan Associates intends to work with the pure intermunicipalities on the integration of different applications of their cable activities. The pure intermunicipalities represent roughly one third of all Flemish cable customers.
Commenting on the deal, Andrew Sukawaty, President and COO of Callahan Associates, said: "We are investing in Flanders future. This agreement accelerates Flanders leap forward in high speed internet, communications, and digital entertainment services. It will bring the Region great infrastructural advantages over other parts of the European Community. Our investment opens the prospect of leading edge services to a community welcoming the future. Together with Telenet, we intend to build on the strong growth that the company has delivered, providing customers with the most advanced multimedia services in the world."
Telenet provides telephony, Internet and multimedia services to the Flanders region of Belgium, which represents nearly six million inhabitants, or 58 percent of the country's population. Telenet provides these services on an exclusive basis over the CATV networks of Flemish cable companies, which pass 2.5 million homes and have 2.2 million subscribers.
At the end of last year the CATV networks have been technically upgraded towards 1.8 million households in Flanders (76 percent of all households) and 1.6 million households are ready for Telenet's commercial services (66 percent of all households).
At the end of 2000, 207,100 telephone and Internet lines were operational with residential cable customers or an increase of 230 per cent. since 1999. Almost 1 in 2 Telenet customers acquired broadband Internet access.
Notes to editors:
The Terms "Mixed" and "Pure" intermunicipalities refer to their shareholding structure. The "Mixed" include Electrabel as a shareholder, the "Pure" are exclusively owned by local municipalities.
Callahan Associates International, LLC is a global development and operations company focusing on the information, communications and entertainment markets. It is the managing partner in cable operations encompassing a total of more than 15 million franchise homes. With the addition of a further network in Baden-Württemberg, Germany, which Callahan Associates agreed to purchase on 18 May 2000, the company's European operations will encompass over 20 million franchise homes.1 The deal with Telenet will further expand Callahan Associates' European cable businesses across five of western Europe's markets. Since its foundation and including Telenet, Callahan Associates has raised Euros 10 bn for investment in European broadband companies.
1 Includes figures for the business in Baden-Württemberg, Germany (transactions expected to close first half of 2001 subject to regulatory approvals).
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