International News 2nd January 2004

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Vivendi 'fraud': $50 million fine, Messier leaves with nothing

French media conglomerate Vivendi Universal has reached a final settlement with the United States Securities and Exchange Commission over its expansion policy under VU's former Chairman, Jean-Marie Messier. The company has agreed to pay a $50 million fine and, as part of the deal, Messier has agreed to drop his claims for a $25 million severance package.

The SEC said the French media giant had consented to the civil penalty to settle charges of defrauding shareholders. Messier and former Vivendi CFO Guillaume Hannezo have agreed to pay more than $1 million in fines. Messier has also been banned from serving as a Director of a US company for 10 years.

The SEC said the money would be used to compensate defrauded investors who received misleading information about the financial condition of the company that grew from an environmental and water company into a sprawling media giant.



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NBC, Vivendi merger hits snag
NBC and Vivendi Universal Entertainment's merger has hit a snag because internal NBC documents have antitrust watchdogs worried about the effect the deal could have on consumers.

The European Commission approved the $14 billion deal, but the US' Federal Trade Commission issued a second request for information from the companies. The move followed the FTC's receipt of documents showing some at NBC think the merged company could raise fees cable operators pay for its programming.

The merged company, which will be known as NBC Universal, would combine General Electric's NBC with Universal's movie, TV production, theme park and cable assets under NBC control. It would be the world's sixth-largest media company.



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Star News gets green light to uplink from India

Rupert Murdoch's Star News has finally agreed a 10 year deal to uplink from India. In 2003, Star News uplinking remained a controversial issue after the channel applied for permission to uplink from India and government detected loopholes in the application.

A new entity, Media Content and Communication Services, was floated for Star News, but the government questioned its real ownership. Ultimately, government changed its uplinking rulebook. The norms say that a single Indian entity must hold at least 51 per cent in the company seeking uplinking from the country. From among various suitors ready to partner with Star, Kolkata-based Ananda Bazar Patrika (ABP) was Murdoch's final choice. ABP holds 74 per cent in the venture, while Star has 26 per cent.



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Comcast to divest TWC

US cable giant Comcast Corp has requested that Time Warner register for sale Comcast's stake in the Time Warner Cable unit, according to a filing with the Securities and Exchange Commission last week.

The request might lead to an initial public offering of TWC, but sources said the companies are in discussions that focus mainly on alternative ways for Comcast to monetise its stake.

According to the Hollywood Reporter, the ongoing talks about Comcast's TWC stake have been 'amicable' and focused on respecting both sides' strategic goals. TW has said its main goal is to grow its cable footprint, while Comcast wants further financial flexibility for possible acquisitions.

Comcast got its 21 per cent stake in TWC at the end of March 2003 as part of a restructuring of an interest in Time Warner Entertainment, which it inherited by buying AT&T Broadband. Since the restructuring, Comcast has had priority rights to trigger a monetisation process for the TWC stake to further reduce its debt and satisfy conditions of its acquisition of AT&T Broadband. Regulators approved that takeover but required Comcast to divest its entanglement with TW within five years.



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TeliaSonera, Tele2 ink deal with Orange

Swedish telcos TeliaSonera and Tele2 have agreed to buy Sweden's fourth 3G telephone licence from Orange Sverige, owned by UK-based mobile phone operator Orange.

Svenska UMTS-naet, jointly owned by both Swedish companies, already holds a third-generation licence, but they said that the extra capacity of another licence will become useful once consumer demand takes off.

"We believe the mobile internet - email and web surfing from mobile phones - is going to go over big with our customers. And when it does, we will need the extra capacity that this license gives us," Marie Ehrling, TeliaSonera Sweden CEO, said in a statement.

Orange, which acquired the licence in 2000 in a so-called beauty contest, is asking 50 million kronor ($9.3 million). This is a bargain for the Swedish buyers when compared with the 30 billion kronor which Sonera, since merged into TeliaSonera, and its partner paid for their German UMTS licence in an auction.

To comply with the terms of the new licence, Svenska UMTS-naet will expand its network in Sweden's metropolitan areas.



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Telefonica sells Austrian 3G license

Austria's Mobilkom has taken over Telefonica Moviles 3G license holder in the country, 3G Mobile Telecommunications. "With this transaction we've also acquired the right to use 3G Mobile's two UMTS frequency blocks amounting to 9.8 MHz. Thus, Mobilkom Austria holds a total of four packages with 19.8 MHz (FDD)", confirmed Boris Nemsic, CEO of mobilkom Austria and COO Wireless Telekom Austria.

The takeover was approved by the regulatory authority on 17 December 2003. In order to achieve a balance of the UMTS spectrum on the domestic competitive market, Mobilkom Austria will sell one of the four UMTS blocks in its possession by 31 January 2005, which is in line with what the regulatory authority is expected to stipulate.

With this sale Telefonica is finally withdrawing from the Austrian market. The company recognised that its own growth potential was too small to operate as sixth UMTS provider in a country with a population of just over 8 million.



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Cable operators warn of rate hike if CAS deferred in Delhi

Cable television operators in India, threatened to substantially hike subscription rates if the government defers the implementation of the Conditional Access System (CAS) in Delhi.

According to local reports, while consumer watchdogs welcomed the government's decision to review the rollout of CAS in south Delhi, cable operators said they would be forced to hike rates to make up for their losses.

Roop Sharma, president of the Cable Operators Federation of India, explained: "We had made much investment in the last few months on the smooth rollout of CAS. Now if the government suddenly decides to postpone it indefinitely we will have to look at options to make up the losses."

"Besides, most broadcasters have sharply raised their channel prices in the last few months. We will be forced to pass on that hike to viewers," Sharma added.

The government on Wednesday (31/12/03) gave clear signals that CAS would be deferred in Delhi with Information and Broadcasting Minister Ravi Shankar Prasad saying the fate of the pay TV system would be decided after a review of the market situation.



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Hutchison's '3' strengthens signal in UK

Hutchison 3G UK says that it has successfully completed the build and integration of its 5,000th radio base station. These sites mean that '3' now has over 70 per cent population coverage for its video mobile services in the UK, as well as over 98 per cent voice coverage through its national roaming agreement.

David Cooper, CTO '3' UK said: "This coverage means that we have the capacity and the network to offer customers an unrivalled package of voice, data and video services."



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StarHub to launch DTV this year

StarHub, Singapore's only cable television operator, said it will launch its digital television service this year. Although the company was planning to premier DTV by the end of 2003, feedback from trials indicated that "it would be more beneficial to take a bit more time to increase and enhance the content and application offerings," Sandie Lee, StarHub's Senior Vice President for Cable TV Services explained.

The firm is spending $16 million to introduce digital TV, a new service that would potentially boost the amount of programming available to Singapore's four million people, as well as introduce interactive services, such as home shopping and financial services. StarHub hasn't set a date for the launch yet.

Unlisted StarHub has 371,000 customers subscribing to its cable television network as of September 30, 2003. It also offers mobile and fixed line services.

Currently, its cable TV customers have access to about 50 TV channels, including free-to-air channels. StarHub is trying to grow revenue from its various business divisions ahead of a planned initial public offering. In October it said it may not proceed with an IPO in 2004 but didn't specify when an offer would likely take place.

StarHub shareholders are Singapore Press Holdings with a 9.1 per cent stake, Japan's NTT Communications Corp. with 14.5 per cent, British Telecommunications with 11.9 per cent. Unlisted and government-linked companies Singapore Technologies Telemedia Pte. Ltd. and Media Corporation of Singapore own 50.5 per cent and 14.1 per cent, respectively.



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MobilCom hands back its 3G license

Germany's MobilCom has handed back its 3G license to the telecoms regulator. The company says that it is now free to resell 3G services as an MVNO (Mobile Virtual Network Operator) without the cost of building its own network. The license conditions prevent a license holder from also operating as an MVNO.

The license could have been reclaimed by the regulator this month anyway as MobilCom had not reached its minimum coverage obligations. The company ceased building its 3G network following an acrimonious dispute with its then partner, France Telecom. Most of the company