C&W in talks with TeleWest
The deal that is being negotiated would see C&W take a stake in TeleWest, Britain's biggest cable television operator, where US West is an important partner. At the same time, USWest would make a sizeable investment in Mercury, Cable & Wireless's telecommunications arm.
Industry sources said that Cable & Wireless could pay up to pounds 100m for a stake in TeleWest, while US West was interested in taking a 25 per cent stake in Mercury.
Neither company would comment on the talks.
The deal would give a strong boost to Mercury's local telephone services, which depend largely on links with cable television companies.
TeleWest has stakes in 17 franchises that cover 2.9 million homes. Its other partner is TeleCommunications Inc, the largest cable company in the US, which has ambitious plans to take on more franchises in Britain.
Although Mercury already has agreements with cable television companies on local services, relations between the two sides have never been harmonious. Cable companies believe that Mercury's margin for providing the link into the trunk network is too high. Mercury has been concerned that when other trunk operators appear, it will lose many of its cable partners.
Mercury and USWest already have strong links since they decided this year to merge their mobile telephone businesses.
Mercury Personal Communications is to launch a personal communications network jointly with Unitel, which was bought out by USWest.
The mobile telephone service, which will rival cellular networks, is the second important strand in Mercury's plan to increase its presence in local networks.
At the end of last year, Cable & Wireless held talks with AT&T of the US to provide a global telephone service for businesses as part of a deal under which AT&T would have invested in Mercury.
Lord Young, chairman of C&W, has since rejected the idea of global alliances.
Notes from a small island: Is Sealand an independent 'micronation' or an illegal fortress?
World news in pictures
You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
David Cameron goes to war with press over 'swivel-eyed loons' slur
Revealed: Eerie new images show forgotten French apartment that was abandoned at the outbreak of World War II and left untouched for 70 years
- 1 Heading for America? Prepare for the longest US immigration queues ever
- 2 Boxing: Carl Froch slams fellow Brits for sparring with Mikkel Kessler
- 3 You thought Ryanair's attendants had it bad? Wait 'til you hear about their pilots
- 4 David Cameron goes to war with press over 'swivel-eyed loons' slur
- 5 It’s official: thanks to Stephen Hawking's Israel boycott, anti-Semitism is no more
BMF is the UK’s biggest and best loved outdoor fitness classes
Find out what The Independent's resident travel expert has to say about one of the most beautiful small cities in the world
Win anything from gadgets to five-star holidays on our competitions and offers page.
iJobs Money & Business
£550 - £600 per day: Orgtel: Fidessa Analyst / PM - Banking - London - Up to £...
£450 - £500 per day: Orgtel: Sourcing Manager - Banking - London - Up to £500p...
To be discussed at interview.: Queen Elizabeth's School: An experienced and ef...
£294.05 - £330.92 per day + 150 per day travel and accommodation: Orgtel: A le...