Telewest connects, but shares look expensive

TELEWEST, the cable group, yesterday displayed further evidence that it is finally realising the potential of its business that it has promised to for so long. But even this may not be enough to sustain its current share price.

Pre-tax losses deepened for the sixth consecutive year in the 12 months to December, rising to pounds 314m from pounds 310m. However, the market was more interested in Telewest's operating statistics, which generally showed an improvement.

In the cable television business, penetration increased by 1.9 percentage points to 23.8 per cent, while churn - the proportion of the customer base leaving the service - dropped to 29.5 per cent from 34.5 per cent. Telewest's telephony penetration also improved, up by almost 2 points to 30.5 per cent. However, churn also edged up, reflecting a determined campaign by British Telecom to win back former customers.

The figures show the benefits of Telewest's decision to stop digging up the roads in order to concentrate on signing up new customers. The company has introduced a cut-price package combining a basic set of television channels with a cheap telephone service. "It's a combination of good products and great value, and people are more reluctant to give those up," said Tony Illsley, the new chief executive.

Since his appointment in September Mr Illsley - a former chief executive of the Walkers Crisps snack foods group - has focused on improving service levels at the notoriously customer-unfriendly Telewest.

He points out that 94 per cent of calls to the company's customer service centre are now answered, compared to 82 per cent six months ago. The proportion answered within 30 seconds has also improved.

Telewest is gearing up to launch its digital television and high-speed Internet services in the fourth quarter of this year. For the first time, cable operators have an advantage over competitors such as British Sky Broadcasting and British Telecom because they alone have a high-speed network capable of sending and receiving large amounts of data.

Much rests on the ability of these new services to deliver extra revenues for Telewest in the future.

At the moment the City is reserving its judgement. "The evidence is now irrefutable that Mr Illsley has improved the consumer focus at Telewest," said Alan Lyons, telecoms analyst at ABN Amro. "Time will tell whether the statistics respond."

On current forecasts, however, Telewest's share price, which has doubled in the past year, looks expensive. On a ratio of enterprise value to earnings before interest, tax, depreciation and amortisation - a common valuation measure for telecoms stocks - Telewest is now more highly rated than Vodafone.

Few doubt the potential of cable, but Mr Illsley will find it hard to live up to that kind of expectation.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Larry David and Rosie Perez in ‘Fish in the Dark’
theatreReview: Had Fish in the Dark been penned by a civilian it would have barely got a reading, let alone £10m advance sales
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable