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Deutsche Bank group circling cablers

DT's $10.8 bil not met by German bank, but bids are in

BERLIN — Industry analysts are putting their money on Deutsche Bank and partners getting Deutsche Telekom’s lucrative cable networks, although a number of German and international investors made bids last week.

Experts said it would be foolish for Telekom to sell the nine regional cable companies to any of the other bidders, all of which are cable operators and potential rivals.

Deutsche Bank execs, who only offered about half of what the giant phone company was asking, said they were ready to give Telekom far-reaching concessions, such as retaining the right of approval over later buyers and the chance to profit from an eventual flotation of a yet-to-be established management company.

Telekom is keeping a 25% stake in each of the networks.

While Telekom had put the entire network’s value at DM 20 billion ($10.8 billion), Deutsche Bank only bid $4.9 billion.

Five other groups had placed bids by last Friday’s deadline for all or some of the cable companies, including German cable operators Primacom and EWT/TSS, U.S.-based Callahan Associates and the Netherlands’-based United Pan Europe Communications. The German daily Suddeutsche Zeitung is reporting today that global mogul Rupert Murdoch has also put in a bid.

German media giant Bertelsmann also filed a disgruntled bid for all the networks while objecting to the conditions of the sale.

The company said it was not happy with Telekom’s price demands or with its insistence on holding a controlling interest in each of the networks, and expressed its dissatisfaction in a letter to Telekom.

“We said that we could not agree to the conditions in their current form. Because we outlined our conditions, you could call our letter an offer,” a Bertelsmann spokesman told Reuters.

“We could imagine many different types of cooperation in delivering our content over cable networks,” the spokesman added. “We do not necessarily have to buy a network. There are other ways to ensure content distribution.”

The company has refused to publicize the letter or any details of its offer.

Telekom was looking for buyers who would modernize and develop the aging system to accommodate telephone service, high-speed Internet access and digital TV in addition to regular cable TV frequencies.

Unlike other bidders, however, Deutsche Bank is planning to sell the networks after about three years. Telekom estimates the cost of upgrading to be $2.5 billion.

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