DEFA14A 1 a05-17023_9defa14a.htm DEFA14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

 

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Soliciting Material Pursuant to §240.14a-12

 

TELEWEST GLOBAL, INC.

(Name of Registrant as Specified In Its Charter)

N/A

 

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Filed by Telewest Global, Inc.
Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934

This filing consists of certain communications made in connection with the announcement of an Agreement and Plan of Merger among Telwest Global, Inc., NTL Incorporated and Merger Sub Inc., dated as of October 2, 2005.

 

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Creating Cable History

 

 

Jim Mooney and Cob Stenham

 

 

[LOGO]

 

Together. Stronger.

 



 

Forward-Looking Statements

 

Certain statements in this document regarding the proposed transaction between ntl Incorporated (“ntl”) and Telewest Global, Inc. (“Telewest”), the expected timetable for completing the transaction, future financial and operating results, benefits and synergies of the transaction, future opportunities for the combined company and products and any other statements regarding Telewest’s or ntl’s future expectations, beliefs, goals or prospects constitute forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995.  When used in this document, the words “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, and similar expressions or statements that are not historical facts, in each case as they relate to ntl and Telewest, the management of either such company or the proposed transaction, are intended to identify those expressions or statements as forward-looking statements. In addition to the risks and uncertainties noted in this document, there are certain factors, risks and uncertainties that could cause actual results to differ materially from those anticipated by some of the statements made, many of which are beyond the control of ntl and Telewest. These include: (1) the failure to obtain and retain expected synergies from the proposed transaction, (2) rates of success in executing, managing and integrating key acquisitions, including the proposed acquisition, (3) the ability to achieve business plans for the combined company, (4) the ability to manage and maintain key customer relationships, (5) delays in obtaining, or adverse conditions contained in, any regulatory or third-party approvals in connection with the proposed acquisition, (6) availability and cost of capital, (7) the ability to manage regulatory, tax and legal matters, and to resolve pending matters within current estimates, (8) other similar factors, and (9) the risk factors summarized and explained in our Form 10-K. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent Form 10-K, 10-Q and 8-K reports.

 



 

CABLE GIANTS MERGE TO TAKE ON SKY

 

NTL to Buy Telewest Global Creating a Telecom Triple Play

 

Cables to connect at last

 



 

Focus on next steps

 

                    The challenge

 

                  To completion and beyond

 

                  The best of both

 

                  Collaboration

 

                  A successful integration

 



 

                  Our people

 

                  Our approach is clear

 

                  Rigorous process

 

                  Retain talent

 

                  Opportunities in an a larger company

 



 

Agenda

 

                  A strong story

 

                  What happens next

 

                  Taking our people with us

 

                  Q&A

 

                  Drinks & canapes

 



 

Telewest Evolution

 

Restructure
Balance
Sheet

 

Restructure
Operations &
Improve
Efficiencies

 

Drive
Customer
Value

 

 

 

 

 

      £3.8bn debt for equity restructuring

      £1.8bn bank refinancing

      Reduced interest expense significantly

      Reduced leverage significantly

      Reduced Capex from £677m to £225m

 

•     Billing systems: 3 to 2

•     2,000 headcount reduction

•     Significantly reduced fault rates

•     90% digital TV customers

•     Re-organisation and refocus of Business Division

•     EBITDA margins increased from 28% to 40%

•     Tighter approach to credit control

 

•     Marketing focus on triples

•     Churn from 1.5% to as low as 1%

•     33% triple play, and growing

•     40% triples at point of sale

•     Maintained ARPU at c£45

•     Flextech Ad revenues up 14% pa

•     Enhance product offerings

•     VOD

•     10 MB BB

•     Ethernet

•     PC Guard

 



 

ntl Evolution

 

Restructure
Balance Sheet
& Corporate
Portfolio

 

Restructure
Operations &
Improve
Efficiencies

 

Drive
Customer
Value

 

Leverage
Scale

 

Next
Steps

 

 

 

 

 

 

 

 

 

•     Rights offering and refinancing

•     Sale of Broadcast and Ireland

•     Interest expense halved

•     Leverage more than halved

•     Debt maturity extended by 5 years

 

•     Call centres: 13 to 3

•     Billing systems: 12 to 3

•     3,000 headcount reduction

•     Single national structure

•     OCF(1) margins improved from 28% to 34%(2)

 

•     Marketing focus on triples

•     25% triple play, and growing

•     15% triples at point of sale, and growing

•     Enhance product offerings

•     VOD

•     10 MB BB

•     Ethernet

 

•     Focus on cable

•     Telewest acquisition

•     »5m customers and
» 10m RGUs

•     Leading triple play service provider in UK

 

•     PVR

•     HDTV

•     VoIP

•     Mobility

•     Off-net

•     Content

 


(1)   Defined as operating income before depreciation, amortization and other charges.

(2)   From Q1 2003 to Q2 2005.

 



 

Illustrative comparative data (1)  - ntl

 

Net Customer Adds (000) (on-net)

 

[CHART]

 

Closing RGUs (000) (on-net)

 

[CHART]

 

OCF (£m) (3)

 

[CHART]

 

Operating Cash Flow (£m) (4)

 

[CHART]

 


                                          Footnotes for ntl & Telewest comparative data

                  (1) Illustrative comparative data compiled from publicly available information. The two companies did not necessarily use the same terminology or methodology in preparing this data.

                  (2) LTM represents the twelve months ended June 30, 2005

                  (3) ntl uses Operating income before depreciation, amortization and other charges (OCF) and Telewest uses Adjusted EBITDA. These terms are non-US GAAP measures and may not be calculated in the same manner.  No adjustments have been made for accounting policy differences or for inter-company transactions. Fresh start accounting applied on exit from financial restructuring by ntl in Jan 03 and Telewest in July 04.

                  (4) OCF less Fixed Asset Additions.

 



 

Net Customer Adds (000) (on-net)

 

[CHART]

 

Closing RGUs (000) (on-net)

 

[CHART]

 

OCF (£m) (3)

 

[CHART]

 

Operating Cash Flow (£m) (4)

 

[CHART]

 


              Footnotes for ntl & Telewest comparative data

                  (1) Illustrative comparative data compiled from publicly available information. The two companies did not necessarily use the same terminology or methodology in preparing this data.

                  (2) LTM represents the twelve months ended June 30, 2005

                  (3) ntl uses Operating income before depreciation, amortization and other charges (OCF) and Telewest uses Adjusted EBITDA. These terms are non-US GAAP measures and may not be calculated in the same manner. No adjustments have been made for accounting policy differences or for inter-company transactions. Fresh start accounting applied on exit from financial restructuring by ntl in Jan 03 and Telewest in July 04.

                  (4) OCF less Fixed Asset Additions.

 



 

Illustrative comparative data (1) - Telewest

 

Net Customer Adds (000) (on-net)

 

[CHART]

 

Closing RGUs (000) (on-net)

 

[CHART]

 

Adjusted EBITDA (£m) (3)

 

[CHART]

 

Operating Cash Flow (£m) (4)

 

[CHART]

 


                                          Footnotes for ntl & Telewest comparative data

                  (1) Illustrative comparative data compiled from publicly available information. The two companies did not necessarily use the same terminology or methodology in preparing this data.

                  (2) LTM represents the twelve months ended June 30, 2005

                  (3) ntl uses Operating income before depreciation, amortization and other charges (OCF) and Telewest uses Adjusted EBITDA. These terms are non-US GAAP measures and may not be calculated in the same manner. No adjustments have been made for accounting policy differences or for inter-company transactions. Fresh start accounting applied on exit from financial restructuring by ntl in Jan 03 and Telewest in July 04.

                  (4) Adjusted EBITDA less Fixed Asset Additions.

                  (5) Telewest LTM includes £20m from VAT recovery and rates rebate in Q205. Sit-up consolidated from May 13, 2005

 



 

Stock Price Performance

 

Relative Stock Performance

 

[CHART]

 

Absolute Stock Performance

 

[CHART]

 



 

Additional Information and Where to Find it

 

This filing may be deemed to be solicitation material in respect of the proposed merger of ntl and Telewest.  In connection with the proposed merger, ntl and Telewest will file a joint proxy statement / prospectus with the U.S. Securities and Exchange Commission (the “SEC”).  INVESTORS AND SECURITY HOLDERS OF NTL AND TELEWEST ARE ADVISED TO READ THE JOINT PROXY STATEMENT / PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.  The final joint proxy statement / prospectus will be mailed to stockholders of ntl and Telewest.  Investors and security holders may obtain a free copy of the joint proxy statement / prospectus, when it becomes available, and other documents filed by ntl and Telewest with the SEC, at the SEC’s web site at http://www.sec.gov.  Free copies of the joint proxy statement / prospectus, when it becomes available, and each company’s other filings with the SEC may also be obtained from the respective companies.  Free copies of ntl’s filings may be obtained by directing a request to ntl Incorporated, 909 Third Avenue, Suite 2863, New York, New York 10022, Attention: Investor Relations.  Free copies of Telewest’s filings may be obtained by directing a request to Telewest Global, Inc., 160 Great Portland Street, London W1W 5QA, United Kingdom, Attention: Investor Relations.

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 

Participants in the Solicitation

 

ntl, Telewest and their respective directors, executive officers and other members of their management and employees may be deemed to be soliciting proxies from their respective stockholders in favour of the merger. Information regarding ntl’s directors and executive officers is available in ntl’s proxy statement for its 2005 annual meeting of stockholders, which was filed with the SEC on April 5, 2005. Information regarding Telewest’s directors and executive officers is available in Telewest’s proxy statement for its 2005 annual meeting of stockholders, while was filed with the SEC on April 11, 2005. Additional information regarding the interests of such potential participants will be included in the joint proxy statement / prospectus and the other relevant documents filed with the SEC when they become available.

 



 

Taking our people with us

 

 

Neil Berkett

 



 

Forward-Looking Statements

 

Certain statements in this document regarding the proposed transaction between ntl Incorporated (“ntl”) and Telewest Global, Inc. (“Telewest”), the expected timetable for completing the transaction, future financial and operating results, benefits and synergies of the transaction, future opportunities for the combined company and products and any other statements regarding Telewest’s or ntl’s future expectations, beliefs, goals or prospects constitute forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995.  When used in this document, the words “believe”, “anticipate”, “should”, “intend”, “plan”, “will”, “expects”, “estimates”, “projects”, “positioned”, “strategy”, and similar expressions or statements that are not historical facts, in each case as they relate to ntl and Telewest, the management of either such company or the proposed transaction, are intended to identify those expressions or statements as forward-looking statements. In addition to the risks and uncertainties noted in this document, there are certain factors, risks and uncertainties that could cause actual results to differ materially from those anticipated by some of the statements made, many of which are beyond the control of ntl and Telewest. These include: (1) the failure to obtain and retain expected synergies from the proposed transaction, (2) rates of success in executing, managing and integrating key acquisitions, including the proposed acquisition, (3) the ability to achieve business plans for the combined company, (4) the ability to manage and maintain key customer relationships, (5) delays in obtaining, or adverse conditions contained in, any regulatory or third-party approvals in connection with the proposed acquisition, (6) availability and cost of capital, (7) the ability to manage regulatory, tax and legal matters, and to resolve pending matters within current estimates, (8) other similar factors, and (9) the risk factors summarized and explained in our Form 10-K. For additional information concerning factors that could cause actual results to materially differ from those projected herein, please refer to our most recent Form 10-K, 10-Q and 8-K reports.

 



 

Why mergers fail

 

[CHART]

 

Source: The Art of M&A Integration, industry literature, Roffey Park Management Institute, McKinsey (quoted by Robin Andrews & Desiree Sylvester at IABC 2005)

 



 

[Notes from previous slide]

 

Weve just heard a lot about the things that have to happen to bring these two organisations together.  

 

From the outside in, strikes me that both organisations are extremely good at rising to the occasion & delivering rolling their sleeves up & just getting on it.  Youre certainly not unnerved at the sight of those huge projects like integrating the network, bringing together systems, maybe rationalising the property portfolio. 

 

What I want to focus on is the PEOPLE side of the equation.  You probably all know about these sort of statistics that say 60% of M&A actually destroy value in organisations.  And the reason mergers fail is partly because of process/business issues bad management, basically - but its also about 50% due to people issues. 

 

Somebody said to me that these sorts of stats are worthless its common sense that you need to look after the people issues in this sort of process. But whilst we all might know its common sense, the question is, do we actually give it the attention it deserves?  Or do we focus on what we may see as the more difficult issues such as systems and network integration, and almost by default, not focus quite so much on what we might see as the easier people piece particularly when youve been through such large scale change before.

 

There was a lot of energy put into making the announcement last week and making sure colleagues and associates were clear about what it meant.  But really as far as our people were concerned, that WAS almost the easy part.  And now the challenge begins.

 

 



 

 

NTL and Telewest’s
long engagement

 

NTL & TELEWEST
FINALLY TIE THE KNOT

 

What next for the
newlyweds?

 



 

A marriage made in heaven …?

 

[GRAPHIC]

 



 

Seven features of great companies

 

                  Structure drives strategy

 

                  Sense of urgency

 

                  Culture of excellence

 

                  Really big goals

 

                  Disciplined about decision-making

 

                  Clear ownership and accountability

 

                  Superior execution

 



 

Our guiding principles

 

                  fact based decision making

 

                  cultural issues a high priority

 

                  keep our focus on the customer

 

                  maintain high standards in day to day operations

 

                  regular communication

 

                  decide senior management team early to provide clarity

 



 

Making people issues a priority

 

[GRAPHIC]

 



 

Three common characteristics of great leaders

 

[CHART]

 



 

Staying focused on our customers, maintaining operational standards

 

[LOGO]

 

[LOGO]

 



 

Communication

 

                  A lot of questions we can’t answer

 

                  Legal restrictions on what we can say

 

                  People must get the facts from us

 

                  Clear sources of information

 

                  Regular updates

 

                  You know your people best

 



 

Leadership Appointments

 

                  Selection of Senior Leadership before closing

 

                  Objective process using external specialists

 

                  Competency-based

 

                  Equitable and fair

 

                  Open and transparent

 

                  Strict governance

 



 

Long Term Incentive Plan (LTIP)

 

                  Annual grant of options based on 50% of base salary (on target)

                  Vesting over five years

                  No performance conditions

 

                  Annual grant of restricted stock based on 50% of base salary (on target)

                  Three year vesting

                  Performance conditions

 



 

Our guiding principles

 

                  cultural issues a high priority

 

                  keep our focus on the customer

 

                  maintain high standards in day to day operations

 

                  regular communication

 

                  decide senior management team early to provide clarity

 



 

 

[GRAPHIC]

[GRAPHIC]

 

[GRAPHIC]

 

Head
Albert Einstein

 

Hands
Vincent Van Gogh

 

 

 

 

 

[GRAPHIC]

 

[GRAPHIC]

 

Bum
Jennifer Lopez

 

Chest
Superman

 

 

 

 

 

[GRAPHIC]

 

[GRAPHIC]

 

Feet
David Beckham

 

Legs
Kelly Holmes

 



 

Taking our people with us

 

 

Neil Berkett

 



 

Additional Information and Where to Find it

 

This filing may be deemed to be solicitation material in respect of the proposed merger of ntl and Telewest.  In connection with the proposed merger, ntl and Telewest will file a joint proxy statement / prospectus with the U.S. Securities and Exchange Commission (the “SEC”).  INVESTORS AND SECURITY HOLDERS OF NTL AND TELEWEST ARE ADVISED TO READ THE JOINT PROXY STATEMENT / PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.  The final joint proxy statement / prospectus will be mailed to stockholders of ntl and Telewest.  Investors and security holders may obtain a free copy of the joint proxy statement / prospectus, when it becomes available, and other documents filed by ntl and Telewest with the SEC, at the SEC’s web site at http://www.sec.gov .  Free copies of the joint proxy statement / prospectus, when it becomes available, and each company’s other filings with the SEC may also be obtained from the respective companies.  Free copies of ntl’s filings may be obtained by directing a request to ntl Incorporated, 909 Third Avenue, Suite 2863, New York, New York 10022, Attention: Investor Relations.  Free copies of Telewest’s filings may be obtained by directing a request to Telewest Global, Inc., 160 Great Portland Street, London W1W 5QA, United Kingdom, Attention: Investor Relations.

 

This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

 

Participants in the Solicitation

 

ntl, Telewest and their respective directors, executive officers and other members of their management and employees may be deemed to be soliciting proxies from their respective stockholders in favour of the merger. Information regarding ntl’s directors and executive officers is available in ntl’s proxy statement for its 2005 annual meeting of stockholders, which was filed with the SEC on April 5, 2005. Information regarding Telewest’s directors and executive officers is available in Telewest’s proxy statement for its 2005 annual meeting of stockholders, while was filed with the SEC on April 11, 2005. Additional information regarding the interests of such potential participants will be included in the joint proxy statement / prospectus and the other relevant documents filed with the SEC when they become available.

 



 

Integration…what happens next…

 

 

Shai Weiss / Neil Smith

 



 

Objectives

 

Leverage increased scale to accelerate growth

 

Realise synergies against a demanding set of targets

 

Establish the organisation, processes and systems to create a leading communications and entertainment company

 



 

Integration

 

                  Organisational structure

 

                  Key processes

 

                  Infrastructure and systems

 

                  Culture

 

                  Synergies

 

                  BAU

 



 

Timeline

 

Pre-

 

 

 

 

Collaborative

 

Collaborative

 

Implementation

April - Sept

 

3-4 months

 

6-18 months

 

 

 

 

 

•     Plan

 

•     Validate

 

•     Day One

 

 

 

 

 

•     Estimate

 

•     Prioritise

 

•     Execute

 

 

 

 

 

•     Set-up

 

      Baseline plans

 

•     Control

 

 

 

 

 

 

 

•     Resource

 

•     Correct

 



 

Structure

 

Board Committee

 

Jim Mooney

Simon Duffy

Cob Stenham

 

 

 

Steering Group

 

Merger Office

 

 

 

 

Simon Duffy

Neil Smith

 

Neil Smith

Shai Weiss

Neil Berkett

Carolyn Walker

 

 

 

Jacques Kerrest

Howard Watson

 

 

Mike Riddle

Shai Weiss

 

 

 

 

 

Workstreams

 

Support Functions

 

 

 

Consumer

Networks

Customer

 

Internal Communications

 

 

 

 

 

Business

IT

Central
Support

 

People

 

 

 

 

Culture

Brand

OD

HR

 

 

 

 

 

 

Financial Planning

Day One

Purchasing

 

 

 

 

 

 

 

Legal

 



 

Involvement

 

 

 

People

 

 

 

 

 

Steering Group

 

10

 

 

 

 

 

Merger Office

 

5

 

 

 

 

 

Workstream Leaders

 

15-30

 

 

 

 

 

Workstream Core Teams

 

c. 50

 

 

 

 

 

Project Support

 

Broad

 

 



 

Classification

 

 

+

Synergy

 

 

 

 

 

Net Financial Benefit

0

 

Strategic

 

 

 

 

 

-

Operational

 

 

 

 

 

Time (3 years)

 



 

Operational

 

Reporting

 

Single ERP system

 

HR policies

 

Compliance

 



 

Synergy

 

Interconnect

 

Programming

 

Installs

 

Contact Centres

 

Purchasing

 



 

Strategic

 

Culture

 

Brand

 

Portfolio Management

 

Single Billing Platform

 

Optimal Processes

 



 

Projects

 

Workstream

 

Number

 

 

 

 

 

Consumer

 

17

 

 

 

 

 

Business

 

4

 

 

 

 

 

Customer

 

16

 

 

 

 

 

IT

 

14

 

 

 

 

 

Networks

 

8

 

 

 

 

 

Central Support

 

23

 

 

 

 

 

Purchasing

 

5

 

 

 

 

 

Total

 

87

 

 



 

Financial Highlights

 

 

 

LTM

 

 

 

£m

 

Combined(1), (2), (3)

 

Value

 

 

 

 

 

 

 

OCF(4) – Fixed Asset Additions

 

705

 

c. 250

 

 

 

 

 

 

 

Implementation Costs

 

 

c. 250

 

 


Notes:

(1)          Sit-up results consolidated from 13th May onwards

(2)          As per financials restated for sale of Ireland and Broadcast, for last 12 months ending 30th June 2005

(3)          Not adjusted for intercompany amounts or other adjustments that will be reflected in pro forma financial statements included in the merger joint proxy statement/prospectus.  Not adjusted for potential accounting policy differences between ntl and Telewest

(4)          Operating income before depreciation, amortisation and other charges (OCF)

 



 

Synergy Prioritisation

 

[CHART]

 



 

Sequencing

 

Enabling Projects

 

Dependent
projects

 

 

Organisation Design

 

 

 

Brand

 

Portfolio Management

 

Network Integration

 

 

 

Billing System Upgrade

 

 



 

Implementation Phases

 

 

Day One

 

 

BAU

================================>

 

 

Collaborative

====>

 

 

Operational necessities

========>

 

 

“Quick win” synergies

===============>

 

 

Synergies

======================>

 

 

Long-term operating and strategic projects

================================>

 



 

Collaboration

 

Communication

 

Blueprint

 

Implementation

and Review

 

Development

 

Planning

5 weeks

 

5-7 weeks

 

5-7 weeks

 

 

 

 

 

      Review

 

      Organisation design

 

      Implementation plans

      Validate

 

      Prioritise

 

      Day One projects

      Refine

 

      Sequence

 

      Day One communication

 



 

30 Days

 

                  Kick-off

 

                  Sponsors and leaders identified

 

                  Teams fully briefed

 

                  Joint workstreams underway

 

                  Work to date reviewed

 



 

Next Steps

 

                  Workstream sponsors and leaders identified and briefed – this week

 

                  Workstream team members appointed – next week

 

                  Initial workstream briefings – next week

 

                  Commence reviews of work to date – immediately thereafter

 

                  End of review period (first major milestone) – week commencing November 14th

 



 

                  Competition Law and Merger Regulation

 

                  Until closing, competition law and merger regulation continue to apply to all discussions between the two companies

 

                  Avoid De-Facto Merger

 

                  We can prepare for closing but we cannot behave in a fashion that implies a de-facto merger; the companies are still independent

 

                  Avoid Pricing Collusion

 

                  Maintain confidential pricing information for customers and suppliers

 

                  Avoid Breach of Confidentiality

 

                  Confidentiality clauses should be respected

 

                  Avoid Penalties

 

                  Fines and criminal offences can still apply notwithstanding the signing of the merger agreement

 

                  Questions should be directed to Stephen Cook, Bryan Hall or Keith Monserrat (or their teams)

 



 

Together. Stronger.