The Government is set to order the sale of Cablelink, the television cable company, in the New Year, and is currently considering a report on its future. Although a price has not yet been decided, it is estimated to be worth in excess of £200 million and would be highly-sought after by other data service providers.
The company is currently 75 per cent owned by Telecom Eireann, which has an option on the remaining 25 per cent, currently owned by RTE. However, it needs substantial investment, with some sources putting the figure at £150 million-£200 million.
Cablelink, which provides television services in several cities, including, Dublin, Galway and Waterford, would be very attractive to competitors of Telecom, as it has a line into most of the Republic's wealthier households.
Cablelink could become a vital multimedia link-up in the future, if properly developed. Telecommunications operators have been openly critical of Telecom's involvement in the company and some believe the State operator will be told to divest its stake next year.
There is also a view in Government circles that Telecom will not develop the cable network, and will offer it to others, as it could wind up effectively competing against itself. The Minister for Public Enterprise, Ms O'Rourke, told the Dail this week that her department was considering a report containing proposals from Telecom regarding the future of Cablelink.
"Any decision in relation to the future of Cablelink will be taken in the context of the Government's overall policy in relation to the Information Society and the enhanced capability of cable networks to deliver interactive multimedia services, voice telephony and digital TV," she said.
Ms O'Rourke also said the regulatory environment regarding the ownership, access and delivery of such services, would also be taken into account.
Operators have accused Telecom of not developing Cablelink and of buying it for defensive reasons. The company, if developed properly, will become an important deliverer of telephony, pay-per-view TV, video on demand and high speed Internet services.
Telephony operators argue that Telecom cannot be allowed to hold what are essentially the rights to two fixed wire telephony services into the home, and say they should be forced to divest, as has happened in some other EU countries.
It is believed the Telecom report argues that it will develop Cablelink and offer it as a multimedia platform to other operators.
The EU has already commissioned its own studies into state telecoms operators who own cable TV services. Although the findings may not directly result in Telecom divesting its stake, the EU has warned that, under competition rules, telecoms companies may be forced to do so.
The studies found that telecoms firms had held back the development of cable services. Estimates on how much needs to be invested in Cablelink vary, with some sources saying it will only take about £120 million to upgrade.
