Macquarie pays $3.4b for towers

A fund managed by Macquarie Bank, Australia's largest investment bank, agreed to buy NTL's transmission towers in the UK for £1.27 billion ($3.4 billion), seeking to boost returns after outperforming benchmark indexes this year.

Macquarie Communications Infrastructure Group, managed and almost one-third owned by Sydney-based Macquarie Bank, said yesterday it would sell A$920 million ($995 million) of shares to existing investors to help fund the purchase. NTL, the UK's biggest cable television operator, said it would use proceeds to boost dividends, buy back stock or repay debt.

Macquarie Bank's earnings have almost quadrupled in the past six years as the bank boosted revenue from managing funds investing in airports, toll roads and other infrastructure.

NTL, which is paring debt and focusing on internet operations, reduced its loss to £95.4 million in the third quarter.

Macquarie Bank reaps fees for managing publicly traded funds such as toll-road developer Macquarie Infrastructure Group and Macquarie Airports, which owns stakes in airports in Brussels, Rome, Sydney, and Birmingham and Bristol in the UK.

The bank's specialist funds under management rose 43 per cent to A$33.2 billion in the six months ended September 30 from a year earlier as it started new funds in Europe and the US. It was paid a bonus fee of A$10.4 million for the six months ended June 30 after Sydney-based Macquarie Communications performed better than the S&P/ASX 200 Industrials Accumulation Index.

Macquarie Communications, which had its stock halted yesterday, will own 54 per cent of the NTL assets. Its shares last traded 16 cents higher at A$5.40 in Sydney and have risen 78 per cent this year, almost four times more than the benchmark S&P/ASX 200 Index.

Credit Suisse First Boston, UBS AG and Macquarie Bank will manage the share sale, on a 1-for-1 basis to existing shareholders.

Macquarie Communications owns Broadcast Australia, which owns and operates a national broadcast transmission network, providing transmission services to the Australian Broadcasting Corp, Special Broadcasting Service and other regional network services.

"Macquarie Communications has been an excellent owner of a similar business we sold to them in Australia in 2002," NTL chief executive Simon Duffy said in a statement.

England-based NTL's profit at the towers unit, with clients including ITV and the Discovery Channel, fell in the third quarter.

The broadcasting towers are used by every UK mobile-phone network operator, including Vodafone and Deutsche Telekom's T-Mobile International.

"With medium and long-term contracts in place with the majority of NTL's broadcast customers, the business is expected to continue to deliver stable and predictable cash flows," said Macquarie Communications chief executive Scott Davies.

The Macquarie Communications-led consortium includes Macquarie Bank, which will own 13 per cent of the NTL assets, Industry Funds Management, Challenger Financial Services Group, MTAA Superannuation Fund and Powertek Bhd.

"The acquisition should be well received," said Scott Maddock at BT Financial Group, which holds Macquarie Communications stock. "This is about Macquarie Communications purchasing good assets."

- BLOOMBERG