Cable firms set for merger - report

Cable companies NTL and Telewest are set to announce plans for a £6.8bn (€10bn) merger by the end of the summer, it was reported today.

It is understood that NTL will make a cash and shares offer for Telewest before the summer is out, and possibly as soon as the end of this month.

The two groups, which are both listed on the US Nasdaq Index, have long been linked as likely tie-up partners, with a combined group better placed to take on bigger rivals such as BSkyB.

It is thought that Simon Duffy, NTL’s chief executive, will head up the new combined group, while chief executive of Telewest Barry Elson will become non-executive chairman.

Investment bank UBS has predicted NTL will offer $24 (£13.58/€20) per share for its rival, valuing the company at almost $5.9bn (£3.33bn/€4.9bn), according to the Independent on Sunday.

Shares in Telewest closed at $22.72 (£12.85/€19) on Friday, while those in NTL ended the week at 68.75 US dollars (£38.89).

The companies, which offer telephone and broadband services and cable television, cover different areas of the UK so it is thought unlikely that the move would be blocked by the Competition Commission.

It is thought the combined entity would be able to make savings of around £200m (€296m) a year, offering services to around 50% of the UK population.

An NTL spokesman said: “The company does not comment on press speculation.”

No one from Telewest was available to comment.

Earlier this year NTL announced that losses from its continuing operations had narrowed to £62.6m (€92.6m) during the first quarter from £75.5m (€111.7m) a year ago, while revenues of £517.3m €765.2m) were nearly 1% ahead of a year ago as the group benefited from an increase in sales of cable services to households.

The group, which is based in Hook, Hampshire, emerged from bankruptcy protection in 2003 and began a major financial overhaul to generate new capital and reduce interest repayment charges.

It organised a rights issue to raise £824.3m (€1.2bn) and trimmed its workforce, with 1,500 call centre staff losing their jobs.

Telewest completed its £4bn (€5.9bn) restructuring in July last year, under which Telewest Communications plc was replaced by Telewest UK, a subsidiary of the new US holding company, Telewest Global Inc.

Revenues for the three months to the end of March were £338m (€500m), an increase of £2m (€2.9m) on the last quarter of 2004. Net income was £1m (€1.5m), against £4m (€5.9m) a year earlier.