UPDATE 2-Comcast divestitures may be worth roughly $18 bln -source

Mon Mar 31, 2014 1:23pm EDT

(Adds analyst comment)

By Liana B. Baker

March 31 (Reuters) - The 3 million subscribers that Comcast Corp plans to divest as part of a proposed takeover of Time Warner Cable Inc might be worth roughly $18 billion, according to a source familiar with the matter.

The company has received strong interest from other cable companies and investors, the source added. While the subscribers could be sold off, Comcast is also considering a spinoff of the assets into a separate publicly traded company.

At $18 billion, the 3 million subscribers would be valued at approximately $6,000 each. The value of the subscribers can change, depending on their location and the financial health of their cable network, the source added.

ISI analyst Vijay Jayant said $6000 per subscriber would only be a reasonable valuation for a top tier cable market, and would represent a premium to other publicly listed cable companies that average between $4000-$5000 per subscriber.

"We don't know which markets these are, but if these are contiguous subscribers in smaller markets and not New York for example, I don't know if Comcast can get $6000 per subscriber," he said.

BIGGER BUYBACKS

Comcast said on Monday it is planning to increase its share buyback program by more than 80 percent as the $45 billion takeover of Time Warner Cable undergoes regulatory review.

Comcast is considering adding $2.5 billion to its current $3 billion buyback plan, a Comcast representative said. The size of the repurchase could be higher, depending on the proceeds from the sale of assets related to the divestitures, the company added.

Comcast can increase the buyback after Time Warner Cable shareholders vote to approve the deal, the company said. A date has not been set yet for the vote.

Comcast has said it is willing to divest 3 million subscribers to reduce the concerns about competition of U.S. regulators. The U.S. Justice Department and the Federal Communications Commission are expected to take months to review the merger, focusing on antitrust and public interest concerns, respectively

After the takeover, Comcast would have a footprint spanning from New York to Los Angeles, with a nearly 30 percent share of the pay TV market, as well as a strong position in providing broadband Internet services.

Bloomberg earlier reported on the increased share repurchase and that Comcast divestitures could be worth at least $17.6 billion. (Additional reporting by Arnab Sen in Bangalore; Editing by Saumyadeb Chakrabarty, Jeffrey Benkoe and Andre Grenon)

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