Britt: Time Warner Will Not Participate in Spectrum Auction
Cable TV Operator Passes on 700 Megahertz
By Mike Farrell -- Multichannel News, 12/3/2007 10:41:00 AM
New York – Time Warner Cable president and CEO Glenn Britt officially took his cable company out of the running for the 700 Megahertz wireless spectrum auction later this year, telling a group of investors and analysts here that TWC will sit this one out.
“We are not going to be in the auction. We will not file,” Britt told a morning audience at the UBS Securities Media & Entertainment conference here Monday.
Britt also cast some doubt on the future of a wireless product being added to the bundle of wireline voice, video and data. While TWC is part of the cable consortium with Sprint Nextel to roll out a wireless product – dubbed Pivot – Britt said that there appears to be little demand for a straight wireless telephony service.
“I don’t think the quad play is a big deal,” Britt said. “We have no intention of trying to build the fifth cellular network.”
Britt added that TWC is working with other companies in trying to find another wireless product in which the cable industry can play affordably.
“We’re trying to understand that space and we’re talking to everybody in that business,” he said.
Britt added that TWC does already own some additional wireless spectrum – through its participation in SpectrumCo, another cable consortium, but that the company has not yet decided what to do with that spectrum.
Britt added that Time Warner Inc., which owns an 84% stake in Time Warner Cable, has informed the cable TV operator that it will not sell its 12.4% interest in TW NY Holding, a partnership that holds about 4.5 million TWC cable subscribers.
Earlier this year, Time Warner Inc. said in a Securities and Exchange Commission filing that it was negotiating to sell the interest in TW NY and that it had valued the stake at about $2.9 billion. Britt said that because cable valuations have plummeted this year – TWC stock is down about 30% since it debuted on the public market in March – the parent company has rescinded that offer.
“Time Warner recently told us that at the current values they are not interested in selling that stake,” Britt said at the conference.
The news helped lift TWC stock by about 3% (84 cents per share) to $26.87 each on Dec. 3.
Some analysts had valued the 12.4% TW NY stake as low as $1.3 billion, based on current stock values. The $2.9 billion valuation was made in 200x, when the market was kinder to cable stocks.
Britt added that TWC’s Los Angeles and Dallas systems, acquired through its acquisition of Adelphia last year, should be fully upgraded by the end of the month. He added the systems – which have been plagued by basic subscriber losses – will then enter Phase 2 of TWC’s integration plan (selling new services like high-speed Internet and telephony) in 2008. Phase 3, which Britt said would involve improving TWC’s reputation in those markets, “may take awhile.”
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