2005
Merger musings
By
Mark Neild, of PA Consulting Group
The Sunday Times,
15 May 2005
Sir - While we would agree with your analysis in "UK cable giants set to connect in £5.5bn merger" (Business, last week) that the widely predicted merger between NTL and Telewest was inevitable, we believe that the drivers for this have always come from the financial community rather than strategic imperatives.
The lack of geographical overlap between the two companies implies limited scope for synergy savings apart from consolidation of head-office functions.
Deep integration is likely to prove complex. NTL has only just rationalised its billing and customer care systems following the Cable & Wireless merger over five years ago and diluted plans for federal control of franchises. Telewest and NTL already collectively compete against BskyB - for example, their shared content venture, Front Row - so full integration of their consumer divisions is unlikely to yield substantial benefits.
Opportunities lie in achieving national reach of their business offering in competition to BT and saving interconnection costs through consolidation of their voice and data networks, but on virtually every performance measure Telewest outperforms NTL. The integration programme will need to be highly focused, but have a light touch if it is to deliver.
Mark Neild, a Principal Consultant at PA Consulting Group, has not only built major business restructuring models, but has also delivered tangible benefits from successful project execution. He supplements deep technical and financial knowledge with the practical experience of having managed both private and public sector departments.
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