All your masts are belong to us outfit Arqiva confirms IPO plan

Britain's biggest mast outfit, Arqiva, has confirmed it will float on the London Stock Exchange next month, a move it hopes will raise £1.5bn and reduce its debt. The private equity owned business is a dominant player in Blighty's infrastructure and communications landscape. Some 19 million homes are connected via its 1,500 TV …

[Quentin North]

Crawley

Err. Crawley is in West Sussex. However, Arqiva is in Crawley Court, Winchester, Hampshire, SO21 2QA

[Warm Braw]

Re: Crawley

There's more than one.

A bit disingenuous to say, though, that the biz began in 1922. Even when the BBC's transmitters were privatised in 1997, Arqiva was still eight years from creation.

[Commswonk]

Re: Crawley

...Arqiva was still eight years from creation.

In name, yes, but it can trace its origins from the old (almost prehistoric , now) ITA which morphed into the IBA, then NTL and finally* finishing up as Arqiva.

To reinforce the point where, exactly was the ITA based?, Er, Crawley Court.

But as you said, to claim that it can trace its origins back to 1922 is disingenuous, or perhaps more correctly completely wrong.

*Until the next change of name anyway.

[paulf]

Re: Crawley

"But as you said, to claim that it can trace its origins back to 1922 is disingenuous, or perhaps more correctly completely wrong."

The 1922 connection is likely because Arquiva (the IBA/NTL) bit that ran transmitters for commercial broadcasters acquired Crown Castle UK (that acquired the BBC Transmission business at privatisation in 1997 as CTXI). So it can, kinda, coulda, sorta, claim to have origins back to 1922 but that would come from the BBC Transmission side of things not the IBA side.

[Anonymous Coward]

Re: Crawley

Crawley Court is a former mansion house of Crawley village, a few miles from Winchester. The village grew up to tend the needs of the manor. A quite pleasant place to work at one time, I recall. And you wouldn't be the first to confuse it with the another Crawley, somewhere near Gatwick. In the days before sat navs and ubiquitous postcodes quite a few delivery drivers fell for that, apparently.

And yes, a bit disingenious to claim it goes directly back to 1922 - "trace its roots back to 1922" would be more appropriate.

[mojopo]

Re: Crawley

... and Crawley Court is in the village of , err, Crawley, in Hampshire. It may seem a weird concept, but places can have the same name!

[Chika]

Re: Crawley

I'm currently thinking of the Yeoman of the Guard... or Mikado Overture...

[Anonymous Coward]

Typical

"When the owners bought the business in the noughties, and loaded it with quite a lot of debt... "

And there is your issue.

Have a near monopoly and still screw it up. Well done.

[Missing Semicolon]

Re: Typical

Private Equity types like buying asset-rich but cash-poor businesses, using the assets as collateral of infeasible amounts of debt, then essentially refunding their initial investment in special divvies, "fees" and other shenanigans. They then sit there, banking the dividends until the business goes bust, or they get to cash out again in an "IPO".

Bastards.

[Anonymous Coward]

Re: Typical

Whilst no doubt there are some financiers doing quite nicely out of this, someone had to stump up a billion or two to implement DSO (digital switchover) thus replacing almost every bit of broadcast hardware in the Uk over a 5 year period. Some of the hardware out there had been running for 40 odd years, and some was only a handful of years old. It all had to be scrapped and replaced at great cost. The investment to do that is eye watering, and you get that money back by leasing those facilites out to the BBC and others over a 20 year (give or take) maintenance contract. The governement nor OFCOM would give the money up front to do so, neither do the BBC have that kind of money lying around to spend in one lump, so running up investment and debt is the only way to do it. Oh, and those lease agreements and costs are very tightly monitored and controlled by OFCOM as the business operates in a near monopoly environment.

[Jellied Eel]

Re: Typical

Vaguely correct, except that there'd already been investment in infrastructure to launch 'Freeview'. And then implementing DSO was funded by increasing the cost of the BBC's licence fee and ringfencing a portion of it. Which was then underspent, I think due to costs of helping people make the switch being less than anticipated. Then of course there was a.. slight issue with what to do with the DSO money left over, because the public sector hates to see money go to waste. So rather than a cut in licence fee, the 'DSO' money got repurposed for rural broadband.

So Arqiva made money from DSO, plus playout and broadcast services for Freeview and other satellite channels. Plus renting mast space to mobile companies, microwave links and various public sector radio projects.

[MyffyW]

Re: Typical

To be truly "typical" the floated business will have to be sold to a foreign investor based in one of Russia / China / France (delete as adverse geopolitical winds dictate).

[Roland6]

Re: Typical

Oh, and those lease agreements and costs are very tightly monitored and controlled by OFCOM as the business operates in a near monopoly environment.

Err no, Ofcom is only interested in the charges Arqiva levies on it's users. Ofcom couldn't care less about the way Arqiva finances the provision of it's services.

It is noteworthy that as a private company and not a former state monopoly, Arqiva has escaped from Ofcom's "sounding tough" agenda. Look at the shouting about BDUK and BT not doing this or not doing that and not doing it in a timely way. Yet, from the silence, that £150m of public money, could of simply disappeared into a black hole.

[paulf]

Re: Typical

Philip Carse, analyst at Megabuyte, said: "The primary objective of the IPO seems to be to tidy up a balance sheet weighed down by debt, shareholder loan notes and swap liabilities. punt the business on to some suckers now the PE boys+girls have had a bonanza pay day from loading it up with eye watering levels of debt that will only ever be cleared by a pre-pack Administration (blue prints available - please ask seller for details)."

Frankly this is not a screw up - this is entirely intentional. Borrow money to buy business, load up with debt secured on said business (that has no recourse to shareholders), use money from loans to pay out massive special dividend to PE owners to pay off initial loans and enrich owners, sell business + debt through IPO, leg it before the whole bloody lot implodes from said debt. This PE scam has been going on for at least 15-20 years now.

Why is there no Scrooge McDuck "$$$$$" Icon?

[katrinab]

Re: Typical

And the fact that the interest on the aforementioned loans tends to reduce the tax bill to zero presumably is not a factor in deciding to do this.

[Anonymous Coward]

Re: Typical

Arqiva are not my favourite company in the world. I used to work in radio broadcasting for a large broadcaster and once had a 'fun night'. I was contacted by a listener one night to say that all of our multiple stations had gone off air on Sky. I was then contacted by Homechoice to say that they weren't receiving our feeds either. Having checked that this was indeed the case on Sky, NTL etc. with a fellow engineer we notified a few internal people of the problem. We then contacted Arqiva on the direct line number we had for them and asked if they had a problem. Also why had no one contacted us to say there was a problem? Bloke we spoke to said "Ah that's not my area I deal with radio TX only and if it's TV TX you need to speak to the the TV side." We asked if they had an extension number or could transfer us to which the answer was "No sorry I don't".

Slightly perplexed by that answer we reasoned that the TV side must be in another building or even another site. My colleague tried calling our communications provider to see if there was a fault on the lines. I phoned the switchboard for that Arqiva site. I got through to a very nice security guard who was the only person on reception after hours. I identified myself and explained that I needed to speak to the TV TX desk. I mentioned that I'd spoken to the radio desk already who couldn't help contacting the TV side. He gave me another number which was one digit away from the radio one and said they sit next to each other. Someone was mucking you around mate.

We talked to them identified that it was a fault with our lines to Arqiva and it was fixed fairly quickly. Can't remember what it was off hand but nothing too serious. The question still remained though why had our services been off air for that long and Arqiva hadn't contacted us? I wasn't involved in the post mortem of the event so don't know the outcome but it stuck in the mind that they were crap.

[Anonymous Coward]

All very well replacing one kind of debt for another

but there is no mention on how (or even hope) of how a shareholder makes a return. Dividends are generally accepted as part of the point of being a shareholder.

perhaps all BBC licence fee payers should buy a few as it is highly probable that the new regime will attempt to screw the BBC (as its easier) for fees in order to pay the old dividends...

Seems like this should be quite a show..

[Roland6]

Re: All very well replacing one kind of debt for another

but there is no mention on how (or even hope) of how a shareholder makes a return.

Well, I must congratulate Philip Carse, the analyst at Megabuyte El Reg quotes, for his ability to see through the claims made in the announcement [https://www.investegate.co.uk/arqiva-group-limited/rns/intention-to-float/201710230700042682U/ ] and thus not only fully understanding what is going on here, but to talk about it in public. Because from a casual reading of the announcement you would thing all is roses.

Interestingly, there is one point relevant to the debt repayment, namely only £0.6bn of the £5.2bn of debt is to be repaid to reduce interest costs by £57m pa.

Also El Reg are wrong to say that Arqiva is to sell 25% of it's shares, it isn't. It is creating new shares, as the existing shareholders "intend to only sell Shares through the over-allotment option", thus the IPO is a dilution.

[bed]

Maybe they know something...

We don't know, such as the increasing number of households not watching OTA broadcasts (or not watching at all) leading, eventually, to not needing the infasctructure for OTA broadcasts.

[Roland6]

Re: Maybe they know something...

I wonder what the latency is...

Just that the OTA network is a pre-existing 4G multicast content delivery network. Remember Ofcom are keen for the TV channels to be re-allocated to 4G spectrum and resold to the mobile operators.

There is no real reason why mass consumption streaming content needs to be delivered over the same mast infrastructure as that being used by the handsets in their normal communications to service providers. Hence a question has to be around the viability of telling a handset to tune to a different frequency for the football match, movie etc. than the one used for normal communications. An advantage of this is that the effective cell size of cells receiving such content is much larger and thus your experience of watching a movie whilst travelling could be significantly better than that of the person sitting next to you trying to browse the Internet.

[Nifty]

Re: Maybe they know something...

Exactly. This event follows the rule that when a cash cow stops being one, IPO it.