NTL Inc. History
Telephone: (44) 2079673338
Fax: (44) 2079673322
Incorporated: 1993 as International CableTel
Sales: $3.27 billion (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: NTLI
NAIC: 551112 Offices of Other Holding Companies; 515210 Cable and Other Subscription Programming
We are people who are passionate about broadband. Imagine the Internet working hundreds of times faster than it does now. And imagine being able to use the phone and watch a film at the same time as you're surfing the Internet. Now imagine an office where you can phone, send e-mails, transfer vast amounts of data, run e-commerce and have videoconferencing all through one simple connection. If you like, think of it as a big fat pipe coming into your home or office, capable of carrying huge amounts of different information at once, backwards and forwards, at a speed unknown until now. And broadband is at the heart of our operations. It brings you the emergency services. It brings you business systems. It brings you home services. It comes through wired or wireless networks, to your choice of device. It brings you freedom.
- George Blumenthal and J. Barclay Knapp establish Cellular Communications, which gains a number of U.S. mobile telephone licenses, then sells the business in 1996 to AirTouch (Vodaphone) for $2.5 billion.
- Blumenthal and Knapp launch International CableTel in order to acquire cable television licenses in the United Kingdom; company acquires Insight Communications, then goes public with listing on the NASDAQ.
- Company acquires licenses in Wales, Scotland, and Northern Ireland; launches first U.K. cable Internet access service.
- Company acquires National Transcommunications Ltd. (NTL).
- Company changes name to NTL Inc.
- NTL acquires Comcast UK, ComTel, and Diamond Cable Communications; acquires stake in Newcastle soccer team.
- NTL acquires Cablelink (Ireland), Cable & Wireless Communications, and Cablecom (Switzerland) in a bid to become a global cable and Internet provider.
- Company gains 27 percent stake in French cable operator Noos.
- With debt of more than £10 billion, NTL files for Chapter 11 bankruptcy protection; spins off foreign holdings into separate company, NTL Europe.
- NTL emerges from bankruptcy protection, and launches new Premium Broadband services at the end of the year.
NTL Inc., based in London but registered in the United States and listed on the NASDAQ, has survived the global telecom crash at the beginning of the 21st century by refocusing itself as one of the United Kingdom's top cable-based broadband communications providers. The company is the leading provider of broadband Internet and related services in the United Kingdom, with nearly one million customers. Backed by its own hybrid fiber optic-coaxial network, built at a total cost of more than £12 billion during the 1990s, NTL is able to offer cable television programming; local, national, and international telephone services; and high-speed Internet access to customers through a single line. The company also operates the United Kingdom's national network of broadcast towers, providing analog and digital transmission services for the country's broadcast and satellite-based television networks. The tower network, featuring more than 2,300 broadcast towers and land sites throughout the United Kingdom, has not only provided NTL with a natural backbone for the deployment of its cable-based network, but also provides it with unique opportunities for the deployment of wireless transmission services, both for itself and for third-party providers. NTL operates through five primary divisions: ntl: home, its consumer division, which represents more than 63.5 percent of group sales; ntl: business, providing voice, data, and Internet services to the corporate and community markets, and representing 27 percent of sales; ntl: broadcast, which oversees the group's transmission tower operations, representing 9.5 percent of total revenues; and ntl: networks and ntl: carrier services, which operate the group's network infrastructure and carrier telecommunications services, respectively. Crippled by debt garnered during its rapid growth sprint made during the late 1990s, NTL was forced to file for bankruptcy protection in 2002, yet emerged from its Chapter 11 restructuring at the beginning of 2003. As part of its restructuring, the company split off its non-U.K. operations, and, during 2003 announced its intention to sell off its loss-making cable television operations in Ireland in order to focus exclusively on the U.K. market. Cofounder Barclay Knapp, who survived the group's financial collapse, turned over the CEO spot in the company to Simon Duffy that year.
British Cable Consolidator in the 1990s
NTL was launched in the early 1990s under the name International CableTel by two American businessmen, George Blumenthal and J. Barclay Knapp. The pair had met in the early 1980s when Blumenthal, a wealthy investor who had inherited his father's seat on the New York Stock Exchange, hired Knapp to help him prepare applications for U.S. cellular telephone licenses. Knapp, a former mathematics student at Johns Hopkins University and then enrolled in Harvard Graduate School, instead went into business with Blumenthal. In 1983 the pair established Cellular One, which grew into the highly successful Cellular Communications Inc.
Blumenthal and Knapp sold most of Cellular Communications to AirTouch, later known as Vodaphone, in 1996 for $2.5 billion. By then, Blumenthal and Knapp had already focused their business interests on a new market: the cable television industry in the United Kingdom. Lagging far behind its U.S. counterpart, the U.K. cable television sector had failed to achieve significant penetration levels, which hovered at around the 20 percent mark into the 1990s. Expensive, and burdened by over-large channel offerings, the cable industry was also under imminent threat from the emerging satellite television sector.
In the early 1990s, however, Blumenthal and Knapp came across the case of a U.K.-based cable television operator that had succeeded in selling telephone services to some 30 percent of its customers. The news inspired the pair, who recognized the potential for bundling services via a cable-based platform. As Blumenthal told the Independent: "It changed everything. If you could break the hold of [British Telecom], this is a business model."
In 1993, Knapp and Blumenthal put up $25 million to establish a new company, International CableTel--registered in the United States--and started bidding for a cable television license in the United Kingdom. The company quickly succeeded in acquiring Insight Communications, which held a license covering nearly one million homes. By forming partnerships, CableTel managed to extend its range to nearly 1.5 million homes by the end of the year. Blumenthal and Knapp also quickly took CableTel public, listing it on the NASDAQ in 1993.
With more than $400 million raised from the public offering, CableTel set out to build the infrastructure it needed to fulfill its ambitions. By 1994, the company had already laid more than 1,500 kilometers of state-of-the-art hybrid fiber optic and coaxial lines. Through the rest of the decade, CableTel would spend more than £4 billion ($6.5 billion) on constructing its fiber optic network. The company's range was also expanding steadily, boosted by the acquisition of the licenses from a number of dormant cable companies. As such, CableTel established a presence in Glasgow, Scotland, and in Cardiff, Wales, among other markets.
By 1995, CableTel had extended its coverage to 2.3 million homes, making it the United Kingdom's third largest cable television provider. Yet the company had already begun to extend itself into the telecommunications market, setting up its business service that year, providing voice and data transmission support. At the same time, CableTel became the first U.K. cable provider to offer Internet access services, with the launch of Cable Online.
By 1996, CableTel had signed up nearly 170,000 customers for its Internet service. The company also sold bandwidth to partners for the creation of "virtual" Internet Service Providers, such as VirginNet, launched by Virgin Communications, and Which? Online, created by The Consumers' Association. In October of that year the company at last prepared to test its bundling concept. The company launched a new service in the test market of Luton, offering telephone services combined with a smaller array of television channels--at a low price. Indeed, at £9 per month, the company's subscribers received 12 stations--including seven cable channels--and local and long-distance telephone services. Corresponding offers from the group's competitors paled in comparison.
The results of that test encouraged CableTel to launch the bundled service across its network by the beginning of 1997. The company's new bundled service proved an instant success, and by the end of the 1990s, CableTel boasted the highest sign-up rate in the industry, with customer penetration rates of nearly 50 percent in some regions.
By then, the company had become a truly major player in the British telecommunications market. In June 1996, CableTel acquired National Transcommunications Ltd., otherwise known as NTL. That company had been formed as a spinoff during the breakup of Britain's Independent Broadcasting Authority (IBA) at the beginning of the 1990s. NTL took over the IBA's operation of the country's independent television transmitter network, which provided national coverage through more than 2,000 broadcast towers. Following the completion of the acquisition, CableTel took over NTL's name and logo as its own, becoming NTL Inc.
NTL now went on a buying spree--gaining, along the way, credit for the consolidation of the United Kingdom's fragmented and underdeveloped cable industry. In February 1998, the company bought Comcast UK Cable Partners, paying $600 million to acquire the operator's license for a region serving more than 1.1 million homes. The Comcast acquisition also added more than 6,500 corporate customers to NTL's business branch.
NTL followed that purchase with two more in mid-1998, paying a total of $1.1 billion for ComTel, with a base of 1.1 million homes in the Midlands and South East regions, and Diamond Cable Communications, which served the East Midlands and more than 1.2 million homes. By the end of that year, NTL boldly positioned itself as a major rival to media giant Rupert Murdoch, whose BskyB had already dominated the British satellite television market and who had recently acquired a stake in the Manchester United football club, as well as its Premier League broadcasting rights. NTL responded by acquiring a stake in Newcastle United, grabbing that team's broadcasting rights, then going on to strike similar deals with other Premier League clubs.
NTL also displayed international expansion ambitions. In 1996, the group bought Northern Ireland's Ulster Cablevision, outbidding its closest rival by more than three to one. In 1999, the company moved into Ireland proper, buying Cablelink, the leading cable provider in that country, then traveled to Australia, where it bought that country's National Transmission Network. By the end of the year, NTL had moved onto the European continent, paying $3.7 billion to acquire Switzerland's leading cable television provider, Cablecom. The following year, NTL acquired France's IG Networks, giving it a 27 percent stake in Noos, one of the country's leading cable television providers, for EUR 563 million ($500 million).
By then, however, NTL had stunned the U.K. cable industry by snapping up one of its major rivals, Cable & Wireless Communications (CWC), then in the midst of drawn-out negotiations with another rival, Telewest, in 1999. Yet NTL moved more quickly, outgunning Telewest with a bid worth £6.3 billion ($9 billion), as well as the promise to take over some £1.9 billion in CWC debt. The acquisition--only fully completed in 2000 after withstanding scrutiny from the British Mergers and Monopolies Commission--established NTL as the outright leader in the U.K. cable television market.
Fall and Rise in the New Century
Joining NTL in that purchase was France Telecom, itself eager to expand beyond its home market, which agreed to buy a 25 percent stake in NTL for $5.5 billion. France Telecom was not NTL's first powerhouse partner--the company had earlier sold a stake to Microsoft Corporation for $500 million in a 1999 agreement that enabled NTL to step up its rollout of its broadband offering. With France Telecom, on the other hand, NTL--and through it Blumenthal and Knapp--sought a re-entry into the mobile telecommunications sector. In 2000 the partners tendered a bid of more than £4 billion ($6.4 billion) to acquire one of the United Kingdom's "3G" high-speed mobile telephone licenses.
Instead, BT snatched up the license, and the partners were forced to withdraw their bid--fortunately for NTL. By then, the company had financed its expansion drive almost entirely through debt. With its debt levels topping £10 billion ($16 billion), NTL was finding it more and more difficult to meet even its interest payments, despite the steady growth of its bundled services offerings--and despite the launch and rapid growth of its new broadband service. The company was struggling in other areas as well--by 2001, when it became apparent that its efforts to become a Premier League broadcaster could not be profitable, the company was forced to back out of its agreements, leaving a number of teams with no television coverage.
The collapse of the telecommunications sector at the start of the 2000s proved NTL's undoing. The company's share price went into a nosedive, blocking access to more investment capital. NTL attempted to rein in its costs, reducing much of its capital expenditures--at the same time, the group weathered criticism for a number of somewhat lavish expenditures, such as the $25 million per year cost of its U.S. "headquarters."
Yet the company's efforts came too late. By the beginning of 2002, NTL was forced to default on a $96 million loan payment. The company entered negotiations with its bondholders, eventually working out an agreement giving the bondholder group control of the company, which then began a massive restructuring and recapitalization program under Chapter 11 bankruptcy protection in May 2002. While Blumenthal was forced out of the company, Knapp himself remained at the helm--at least temporarily.
As part of its restructuring, nearly all of NTL's non-U.K. holdings, with the exception of the group's operations in Ireland, were spun off into a separate entity, NTL Europe. NTL cut back on its marketing, instead focusing on improving customer service--successfully reducing its "churn" rate by more than a third by the end of the year, while continuing to sign up more customers. By the end of 2002, the company had grabbed nearly 50 percent of the U.K. broadband market.
NTL came out of bankruptcy protection at the beginning of 2003. With its hands freed, the group once again began a push to win new customers, boosting its entry level broadband product to 150K--compared to rivals' 128K. By April of that year, NTL boasted nearly 700,000 broadband customers. NTL expected that number to rise even more strongly with the rollout in November 2003 of its Broadband Plus content service, available to its higher-speed customers.
NTL had revealed itself as a survivor in a European telecommunications market littered with the corpses of its rivals. Barclay Knapp, however, proved less resistant--in August 2003, Knapp agreed to step down from the company's leadership, turning over the CEO spot to Orange veteran Simon Duffy. At least Knapp, and Blumenthal, could be comforted by the thought of knowing that NTL's ability to survive--and prosper--rested as much on their vision of bundling telecommunications, television, and Internet access services into a single cable.
Principal Subsidiaries: NTL UK; NTL Ireland; NTL Europe.
Principal Divisions: ntl: home; ntl: business; ntl: broadcast; ntl: networks; ntl: carrier services.
Principal Competitors: Vodafone Group Plc; British Telecommunications plc; News Corporation Ltd.; Cable and Wireless PLC; Global Crossing Ltd.; Datatec Ltd.
- Bulkley, Kate, "The Cable Guy," Independent, February 9, 2000, p. 3.
- Hodgson, Jessica, "Sun Sets on Cable Man Who Reached for Sky," Observer, August 17, 2003, p. 9.
- Holmes, Mark, "Barclay Knapp: How Will History Judge NTL's Departing CEO?," Inside Digital TV, August 20, 2003.
- Waxler, Caroline, "Telecom à la Carte," Forbes, July 27, 1998.
- Webdale, Jonathan, "NTL Emerges from Chapter 11 Following US Restructuring," New Media Age, January 16, 2003, p. 15.
- "The Yank Who's King of British Cable," Business Week, August 9, 1999, p. 46.
Source: International Directory of Company Histories, Vol. 65. St. James Press, 2004.