Microsoft offloads stake in Telewest for a paltry £3m

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The Independent Online

The American software giant Microsoft has offloaded all its shares in Telewest for just $5m (£3m) as the troubled UK cable company lurches towards its financial restructuring.

Microsoft, which has long been expected to sell its 23.6 per cent stake in Telewest, had originally bought the stock three years ago for about $2.5bn in paper. Today the entire market capitalisation of Telewest is little over £60m.

The buyer of the Telewest stake is IDT - the California-based telecoms firm in which John Malone's Liberty Media has a stake of around 20 per cent. The move will almost certainly give Liberty Media more influence in Telewest's ongoing rescue refinancing discussions. Liberty Media already owns about 25 per cent of Telewest's shares and has also been buying up bonds. It is said to hold about 10 per cent of the notes.

Telewest's planned debt-for-equity swap will leave shareholders with just 3 per cent of the equity. While the company said recently the talks were going well, it would not be pinned down to a completion date.

Microsoft's exit from Telewest came as little surprise to the City. Last summer, the US software firm had offered to sell its Telewest stake to Liberty Media. Before that, it took its three nominated representatives off Telewest's board.

The confirmation of the stake sale comes just weeks after Telewest announced it had slipped further into the red in the first quarter of the year while revenues stalled. Telewest's losses widened to £186m in the three months to 31 March from £167m in the same quarter a year before.

It also revealed the number of its household customers fell by 15,000 in the quarter to 1.74 million, while it lost 20,266 cable TV subscribers and 12,718 telephone customers.