Telewest talks up future as losses swell to record

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The Independent Online

Telewest Communications, the cable operator, yesterday reported a record loss of £530m for 1999, as it invested in its network, installed systems to offer digital services and took several one-time charges.

The company, which is closing a £13bn merger with the thematic channel producer Flextech, also launched "Blueyonder", Britain's first high-speed cable modem internet service. It will offer unlimited, always-on 500 kilobit-per-second internet surfing, over 10 times faster than phone line Web access, for £50 per month.

"Today is the time when Telewest steps into the whole broadband world and really leverages our broadband network," said Tony Illsley, the chief executive. He added that the digital TV service would have 500,00 customers by the end of the year.

Despite the hefty loss, Telewest shares added 10 per cent to 469.75p as investors focused on operating cash flow, which, on a like-for-like basis, rose 25 per cent to £244m. Sales grew 15 per cent to £865m as the proportion of customers subscribing to telephony service in the company's service areas reached 32 per cent.

Mr Illsley expects to attract 40,000 users to the high-speed internet service by year-end. "We're pretty confident there is a large group of people who will be prepared to pay [£50 per month for Blueyonder]," he said. "Over the next few years that pricing structure will come down."

Blueyonder will launch with a phased regional roll-out to avoid the bottlenecks that affected Surf Unlimited, which launched unmetered Net access in February. "In all honesty, we didn't forecast the demand right," said Mr Illsley, who noted that the service attracted as many customers - some 50,000 - in its first week as had been expected by the end of the year.

Telewest also launched its interactive television service, which offers online shopping and other services from WH Smith, Woolworths and 60 other high street firms. The service's electronic programming guide will feature a TV e-mail service.

Mr Illsley said a new joint venture with Andersen Consulting to develop broadband services could eventually be spun off and floated.

Separately, Adam Singer, the chief executive of Flextech, who will take on that role in the merged group, said the new company may go on the acquisition trail. "Anything of interest that moves, that fits into our strategy, we'll take a look at," he said.

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