Liberty Media, Klesch to Make German Broadband Acquisition

[London, ENGLAND] Liberty Media Corporation and London-based
private equity firm Klesch & Company announced Friday
their intention to purchase Deutsche Telekom’s remaining
broadband cable assets in Germany.

The news follows the announcement that Liberty Media is
to invest up to US $1.4 billion cash in UnitedGlobalCom,
and it commitment to a US $910 million rights offering to
shareholders of its European subsidiary, United Pan-Europe

The Liberty Media-Klesch partnership has agreed to take
55 percent of the equity, plus an option for an additional
20 percent, in regional cable operations that have a total
of over 10 million homes connected.

The regions are Hamburg/Schleswig-Holstein/Mecklenburg-Vorpommern,
Sachsen/Sachsen-Anhalt/Thuringen, Niedersachsen/Bremen,
Rheinland-Pfalz/Saarland, Berlin/Brandenburg and Bavaria.

The partnership will also acquire part of level 4 operator
Deutsche Telekom Kabel Service GmbH (DeTeKS) to serve the
regional operations, plus the whole of Deutsche Telekom’s
holding in MediaServices GmbH (MSG) which operates the
digital platform in Germany.

When the deals are complete, Colorado-based Liberty Media
will be the largest investor in European cable TV.

No further details were available early Friday, with
a conference scheduled for the afternoon to discuss
all the implications of Liberty Media’s big news day.

Deutsche Telekom’s sale of its regional broadband interests
has come after a long battle with the European Commission.
The EC had objected to the German carrier’s dominant position
in access infrastructure in Germany. Subsequently, Deutsche
Telekom sold 65 percent of its cable franchise in Hesse —
again to a Klesch-led consortium — and 55 percent of the
North Rhine-Westphalia unit to a consortium led by Callahan
Associates International.

Like the other large European telcos, Deutsche Telekom
has been struggling to reduce a massive debt burden,
having spent over US $70 billion last year on 3G licenses
and various acquisitions. Earlier this week it registered
to sell US $2 billion of stock in Sprint Corp.

Liberty Media now has interests in a huge range of media
businesses, from Time Warner and QVC, to TV Guide, Motorola,
and The News Corporation. In its prosectus for spinning
off from AT&T it valued its business at US $38.4 billion.

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