Telewest free to pursue its own cable strategies

TELEWEST yesterday shrugged off its failure to merge with Cable & Wireless Communications (CWC) and predicted that it would become the first UK cable operator to offer a full video-on-demand service next year.

Tony Illsley, Telewest's chief executive, said that the "silver lining" of not being part of the pounds 8bn cable consolidation between CWC and NTL was that it could now concentrate fully on its own development plans.

These include launching a 150-channel digital television service this autumn, and a high-speed Internet service with the support of its 29.9 per cent shareholder, Microsoft, in the first quarter of next year.

However, Mr Illsley was careful not to rule out a future merger with NTL/CWC, creating one giant cable operator to compete with BSkyB, ONdigital and British Telecom. "If the opportunity came back on the table, we would be very interested," he said.

Market trials of the new Internet service will begin next spring, with a phased national roll-out during the rest of the year.

Subscribers will be able to rent a special modem for about pounds 30 a month, which will provide Internet access at 40 times the speed of any existing service, enabling them to download compact discs, for instance, in a matter of minutes rather than hours.

The video-on-demand service will be fully available before Christmas next year. The charge per film is likely to be under pounds 3. Telewest will also offer other programming, such as the last five FA Cup finals or Wimbledon finals, as part of the package.

Pre-tax losses in the six months to the end of June rose from pounds 180.5m to pounds 264m. However, profits before interest, tax, amortisation and depreciation rose by 37 per cent to pounds 82m.

Telewest also captured more customers despite reducing the rate of network build, increasing its penetration of homes covered to 25 per cent for television and 31 per cent for telephony.

About 35 per cent of homes passed - 1.4 million households - now take at least one Telewest service.