Virgin Media is thought to be leading the bidding for Pipex, the UK ISP and WiMAX spectrum holder that is currently valued at $659 million. Other bidders reported in UK national newspapers include British Telecom.
Pipex has owned key WiMAX spectrum in the UK for some time, but was also one of the very earliest ISPs in the country. Last week it finally decided to put itself up for sale through UBS.
Virgin Media is made up of the UK arm of Virgin Mobile, plus the two remaining UK cable operators NTL and Telewest. Already they had realized that it was prohibitive to continue to build out the group’s UK infrastructure using cable, and has already switched to a strategy where new territories are reached using unbundled DSL lines.
Control of Pipex would give it a DSL customer base and a reach way beyond its current cable network which only passes around half of UK homes, much in the same way as BSkyB, the rival pay entertainment network, bought Easynet in October 2005, which gave it a beginning in broadband in the UK. Now BSkyB offers free broadband for premium TV and phone customers. Pipex also has a partnership in building a WiMAX network in the UK with Intel. UBS is believed to have asked for first round bids by Friday which we would expect to be at a premium of at least 20% over the current share price.