Debt financing is characterised by rising yields and interest going up, but debt remains very attractive for cable right now, according to Clif Marriott, MD, Goldman Sachs International.
Speaking on a finance panel at Cable Congress, Marriott also said that shares in cable operators are at an all time high despite the fact that growth rates have slowed. “Multiples are relatively high and the backing of the public markets is based on the cable pipe being an efficient way to deliver broadband v DSL,” he said.
Private equity buying cable is, on the other hand, likely to deccelerate as long as valuations remain so high, he said.
Marriott said there was still scope for in-market consolidation in eastern Europe. “If you have strong cable operators in one market, what’s next?” he said. The answer appears to be mergers between large mobile telecom players and cable. “That may happen in a few more markets. The next stage is when you have an integrated cable-mobile network, which is an efficient network creating a good amount of cash flow.”
Operators could then deploy new added value services on top of a converged network that would attract interest in further mergers and acquisitions, he said.
Frank Knowles, principal, New Street Research, said that cable was currently trading at elevated multiples and could therefore drive acquisitions.
However, he said that power to drive further consolidation would rest with companies with the biggest reach and cash resources, meaning global web players like Google.
Knowles said that mergers between mobile and cable are being driven by consumer demand for converged services rather than financial the size of mergers between large operators would inevitably attract greater regulatory scrutiny.
Guy Bisson, research director, television, said that cable could look to acquire CDN infrastructure to take its multi-play to the next stage.
Bisson said cable’s infrastructure would continue to deliver long-term value. He said that, gobally, consumers continued to spend more on access than on content.