NTL stock dives as BT takes on cable rivals

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The Independent Online

The share price of NTL, Britain's biggest cable company, plunged to all-time lows last night in US dealing after British Telecom launched a new discount scheme to market pay television packages from ITV Digital and BSkyB.

BT is trying to win back consumers attracted by the cable operators' "bundled" service packages, which offer telephony, television and internet services from one supplier. Though cable operators have attracted 4.6 million customers, BT still retains 73 per cent of the residential market.

NTL is hobbled by debt of $15bn (£10.7bn) and its share price, off 75 per cent since early May, closed down $1.73 at $8.80. Analysts said it must now sell assets, perhaps its broadcasting transmission business, in order to raise enough funds to see the company through to profitability.

Michael Nathanson, an analyst with Sanford C Bernstein in New York, said: "In this equation the debts overwhelm the equity. They are going to have to ease concerns by selling assets."

The spectre of growing competition in pay-TV also hit the share prices of Telewest, the number two cable operator, and BT. Telewest fell 4.5p to 75p, while BT slid 17.5p to 441.5p.

Angus Porter, managing director of BT's consumer division, said: "Our customers sometimes mistakenly believe they need to move their telephone line to a cable operator to get access to digital TV. That's absolutely not the case."

BT will spend £10m to promote the offer, which will give participating customers a £30 discount on an annual subscription to BSkyB's digital satellite service. The offer for ITV Digital, which yesterday changed its name from ONdigital, will give new subscribers access to more than 30 television channels for £19.95 per month.

Both offers require subscribers to sign up for 12 months. BT said it expects the offers to attract "hundreds of thousands" of new households to pay TV.

ITV Digital and BSkyB together have around 6.5 million subscribers, most of whom are also BT customers. They will not be eligible for the discounts, although cable customers willing to return to BT will qualify.

Earlier attempts by BT and BSkyB to offer a joint phone-pay TV package fell foul of competition rules. A BT spokesman said: "We have taken Oftel through every step of this promotion and they have okayed it."

ITV Digital also launched its ITV Sport subscription channel yesterday, which will feature exclusive broadcasts of Champions League football and Nationwide League matches for £6.99 per month. It will also be available on NTL's cable network and ITV is believed to be close to signing Telewest as a distributor. For an additional £3 a month, subscribers can also buy pay-per-view access to 40 Premier League matches and 20 Nationwide League matches.

Separately, BSkyB has applied to the Independent Television Commission for a non-exclusive local delivery service licence to provide television and related services using digital subscriber line equipment over local phone networks. This could eventually see BSkyB offer its services to households over BT's network.

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