US West sees control of cable company as key to taking on BT

American TV and phone operator strengthens link with UK's high- riding Cable & Wireless. Dawn Hayes reports

COLORADO-based US West Media group announced last week it may seek majority control of UK cable company Telewest. If the deal goes ahead, US West could with its British partner Cable & Wireless gain the critical mass necessary to compete against British Telecom, BSkyB and Vodafone as a new premier league player in the communications industry.

US West and Cable & Wireless are equal partners in One-2-One, a UK mobile phone network, and Cable & Wireless also owns the UK's biggest cable company. By combining forces, the two could emerge as a power on a par with BT and Rupert Murdoch in a market where digital technology is blurring the boundaries between mobile and fixed phone service and between phone and TV services.

At present, British Sky Broadcasting Group dominates the pay-TV market and BT and Vodafone dominate the phone market. All are positioning themselves for a slice of the emerging multimedia market to which they have each committed hundreds of millions of pounds. Cable & Wireless Communications alone has committed to invest pounds 1bn pounds per year for the next three years.

U West, which already owns 26.75 per cent of Telewest, is seeking to buy the two 10 per cent stakes of the UK cable company owned by SBC Communications and Cox Communications, both US communications companies, people familiar with the talks said.

A further 26.75 per cent of Telewest is owned by Tele-Communications International, the biggest US cable company and 10 per cent stake is held by Flextech Plc. The remainder of the shares are quoted.

US West is said to have offered to pay up to pounds 200m to raise its stake in Telewest to 47 per cent, valuing Telewest at pounds 1bn, pounds 100m short of its current market capitalisation.

US West wants to settle the uncertainty that has been hanging over Telewest since its attempts to merge with other UK cable companies failed. The ailing cable industry, backed mainly by US companies, is attempting to consolidate and cut costs after failing to meet original subscription targets.

UK cable companies are allowed to sell both TV and telephone services, a magnet for U.S. companies which in the 1980s were not allowed to sell both in the US. But the attempt to carve a substantial niche in the UK was overtaken by competition from bigger, established TV and telecommunications rivals.

Telewest depends on its biggest rival, British Sky Broadcasting, for TV programming. Telewest has lost a third of its market value in the last year as new TV customers fell by 39 per cent, new phone customers by 31 per cent, in part because BSkyB raised programme prices.

As its losses widened, Telewest cut its marketing costs and a quarter of its staff to save pounds 40 m. The problems are mounting. Yesterday, Telewest said it added 67 per cent fewer television customers and 33 per cent fewer telephone customers in the fourth quarter of 1997 than a year earlier.

US West plans to increase its focus on cable networks that carry integrated TV and telephone services, as one of two businesses it plans to stay in outside the U.S. The company will invest $400m to $600m a year in international cable and mobile phone ventures, Gary Ames, president of US West International, said recently. Half its investment so far has been made in the UK.

Copyright: IOS & Bloomberg

Start your day with The Independent, sign up for daily news emails
Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appeal
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Boxer Amir Khan will travel to Pakistan in bid to 'make a difference' in the wake of army school massacre
Arts and Entertainment
Strictly finalists Simon Webbe, Caroline Flack, Mark Wright and Frankie Bridge
tvLive: Simon Webbe, Caroline Flack, Mark Wright and Frankie Bridgeface-off in the final
Sport
Ched Evans in action for Sheffield United in 2012
footballRonnie Moore says 'he's served his time and the boy wants to play football'
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
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

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture