Dutch Auction
The longer the sale of AOL UK goes on, the more it looks like a Dutch auction as opposed to a English auction it was designed to be.
If the press rumours are to be believed Orange has pulled out of the auction and that leaves two companies:
• Carphone Warehouse – who in my opinion don’t have the cash to pay for the deal without new equity; and
• BSkyB – who have the cash but probably don’t like the terms (ie AOL retain the portal business) and TimeWarner are probably reluctant to sell to BSkyB because of the potential embarrassment of the Murdoch clan making a good business out of a bad one.
I feel the longer the haggling goes on the cheaper the final price will be.
The Times article also puts forward a theory that Ben Verwaayen has been studying the hovering habits of his home PTT, KPN, in the broadband field and is passing his slide-rule over the Tiscali UK operations. This doesn’t make sense to me: Tiscali have just done the deal with Homechoice in the UK and with the recent sale of its’ Dutch operation doesn’t need the cash right now - Tiscali seem to specialise in distressed sales to me.
However, If the Times article said Tiscali recently offered on the quiet both its’ Dutch and UK operations, but has withdrew the sale of its’ UK operations – this would make more sense to me. After all, who wouldn’t try and improve its’ negotiating position with the limited Dutch buyers? More importantly, in the short term BT will revamp the LLU economics with re-pricing of its’ IPStream product. Also, the dropping of the 21CN nuclear bomb onto the market is only a couple of years away. Then will be the time for BT to buy arguing to the Monopolies Commission that there is plenty of competition from ntl and Sky.
This to me this is the UK broadband end-game: 3 network providers with a plethora of specialist resellers.
If the press rumours are to be believed Orange has pulled out of the auction and that leaves two companies:
• Carphone Warehouse – who in my opinion don’t have the cash to pay for the deal without new equity; and
• BSkyB – who have the cash but probably don’t like the terms (ie AOL retain the portal business) and TimeWarner are probably reluctant to sell to BSkyB because of the potential embarrassment of the Murdoch clan making a good business out of a bad one.
I feel the longer the haggling goes on the cheaper the final price will be.
The Times article also puts forward a theory that Ben Verwaayen has been studying the hovering habits of his home PTT, KPN, in the broadband field and is passing his slide-rule over the Tiscali UK operations. This doesn’t make sense to me: Tiscali have just done the deal with Homechoice in the UK and with the recent sale of its’ Dutch operation doesn’t need the cash right now - Tiscali seem to specialise in distressed sales to me.
However, If the Times article said Tiscali recently offered on the quiet both its’ Dutch and UK operations, but has withdrew the sale of its’ UK operations – this would make more sense to me. After all, who wouldn’t try and improve its’ negotiating position with the limited Dutch buyers? More importantly, in the short term BT will revamp the LLU economics with re-pricing of its’ IPStream product. Also, the dropping of the 21CN nuclear bomb onto the market is only a couple of years away. Then will be the time for BT to buy arguing to the Monopolies Commission that there is plenty of competition from ntl and Sky.
This to me this is the UK broadband end-game: 3 network providers with a plethora of specialist resellers.
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