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

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
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

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam