July 22, 2002, 11:35 AM — As if highly indebted Deutsche Telekom AG (DT) didn't have enough headaches, the insolvency of one of the German telco's earlier broadband cable divestments is almost certain to push down the price for the six remaining networks up for sale.
Late Friday Callahan Nordrhein-Westfalen GmbH (Callahan GmbH), the Colgone-based cable holding of U.S. cable investor Richard Callahan, filed for insolvency, the company said in a statement.
The failure of Callahan comes at a bad time for DT. The German telco is entering into a new round of negotiations for its remaining cable networks, following a failed bid by Liberty Media Corp. earlier in the year. With one of its larger former cable units now in trouble, the Bonn-based carrier will have a tough time convincing investors to pay a premium price for the remaining cable assets, observers say.
"Everyone bidding on the networks will point to Callahan as a reason to pay less," said Donald McLoughlin, an independent cable consultant based in Edling, near Munich.
In February 2000 DT sold Callahan GmbH a 55 percent stake, worth