Flotation doubts at Telewest

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TELEWEST, the largest cable operator in Britain, is having last-minute doubts about its pounds 1bn-plus stock market debut, planned originally for early summer.

Advisers to Telewest have been meeting City institutions to soundout whether there is sufficient enthusiasm for the flotation. The company is believed to be within days of making a decision.

If it decides that the stock market is not ready to participate in a large equity offering at what it considers to be a fair price, it will fund future investment in the UK out of its own resources.

However, one motive for the flotation is to enable Telewest to assure regulatory authorities that it is a genuine British-based business. Telewest is owned equally by US West, the Denver-based telecommunications group, and Telecommunications Inc, the largest US cable company.

Although the company appointed Kleinwort Benson and Goldman Sachs to advise on a flotation at the beginning of the year, no decision on timing or size has yet been made.

'No final decision on whether to proceed with the float has been taken yet, although we are optimistic that we might reach that decision in the next few days,' said an adviser, who noted that market conditions for new issues had taken a turn for the worse since the beginning of the year.

Some analysts are surprised that the advisers have given little clue as to how the company might be valued on the stock market. Sources have suggested that the company and its advisers have disagreed over pricing. This is hotly denied. The advisers say that they have not yet discussed pricing in detail with the company, but that they were in broad agreement when the float was first suggested.

City analysts are not at all clear how cable companies will be valued and suspect that the UK market may not rate them as highly as in the US. That may be giving Telewest's owners pause for thought.