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October 15, 1997updated 03 Sep 2016 1:32pm

MICROSOFT MAY TAKE STAKE IN TELE-COMMUNICATIONS INC

By CBR Staff Writer

Microsoft Corp, following its investment earlier this year in cable operator Comcast Corp (CI No 3,219), is rumored to be talking to Tele-Communications Inc with a view to investing between $600m and $1bn in the company, one of the largest cable operators in the US. According to the Wall Street Journal, which quotes people familiar with the negotiations, an investment by Microsoft would provide Tele-Communications with the financing it needs to pay for a huge order of digital cable boxes needed to provide high speed internet access and access to hundreds of digital cable channels. Microsoft’s investment in Comcast was said to have re-kindled interest in the cable industry and its shares. Tele-Communications’ stock has risen about 20% in the past month, and last week, the company’s president Leo Hindery told a Goldman Sachs & Co conference the company would announce a strategic venture that would lift the value of all cable stocks by first snowfall. It is not clear whether Microsoft would take an equity stake, but some reports have suggested the companies are talking about Tele-Communications buying boxes that would use some Microsoft technology. According to the paper, Microsoft has been maneuvering furiously to influence the design of the set- top boxes, since any device that will bring the internet into homes could eventually pose a threat to Microsoft’s desktop business, if a rival operating system were to take hold in these consumer devices. Earlier this week there was an alleged rift in the software giant’s relationship with Comcast over the cable company’s treatment of Microsoft in negotiations on technical standards for cable set-top boxes (CI No 3,267). Sources close to Tele-Communications insist the boxes have an open architecture that would not favor Microsoft over other hardware and software companies.

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