Telewest earnings lifted by cost cuts

Debt-laden cable company Telewest today posted record first quarter underlying profits after slashing spending.

But the group offered no fresh news on the progress of negotiations on restructuring to cancel £3.5bn (€5bn) of debts.

Telewest, which has total debts of £5.32bn (€7.61), said in September that it had reached a preliminary agreement on the overhaul – a plan that involves a debt-for-equity swap leaving shareholders with a fraction of the firm.

Issuing its results for the first three months of 2003 today, the group added that positive negotiations were continuing and promised an announcement on the restructuring “when appropriate”.

Turnover in the first quarter of this year was up slightly on the same period last year at £335m (€479m) with underlying profits up 15% at £105m (€150m).

Telewest said the total number of household customers fell by 15,000 during the quarter – in line with its expectations as the business concentrates on higher margin activities such as broadband high speed internet services.

Growth of 14% in broadband subscribers pushed up internet revenues by 63% to £26m 37.2m).

Capital expenditure was slashed by 48% to £65m (€93m) – or 20% of revenue - while general and administrative expenses were cut by 7% to £118m €169m) as a result of measures, including a 100-strong reduction in headcount.

However, interest costs and write-downs meant the company’s net loss for the the three month period rose to £187m (€268m) from £166m (€237m) a year earlier.

Managing director Charles Burdick said: “The focus on broadband, cash generation and profitable customers meant that, as expected, we experienced customer losses during the quarter.”

But he added that with an increased emphasis on marketing the group planned to see a return to customer growth in the second half of the year.