Telewest axes 1,500 jobs

Debt-ridden cable operator Telewest is axing 14 per cent of its workforce in a drastic bid to save cash and push towards profitability.

The firm, based in Woking, Surrey, is cutting 1,500 jobs as part of a restructuring that it hopes will reduce costs by up to £50 million a year.

Chief executive Adam Singer said the move would "streamline management and flatten reporting lines" in the business.

Telewest has run up debts of £5.28 billion as it expands its cable TV, phone and Internet operations across the UK.

Its shares have been hammered by concerns that the group may have to follow NTL's lead and restructure its finances to break-even.

Last month NTL announced a life-saving debt-for-equity swap after seeing its debts spiral to £11 billion.

Mr Singer dismissed the threat but said Telewest was continuing to "explore its options" to address its funding requirements.

He refused to rule out the possible sale of its content division Flextech, which has been hit by the collapse of ITV Digital.

"The steps we have taken are aimed at helping stabilise our financial future and are a necessary but painful response to market conditions," he said.

"I believe Telewest will be able to operate more efficiently going forward."

Most of the 1,500 job cuts are coming in Telewest's engineering arm while its consumer and business divisions are being merged together.

Mr Singer said no geographical break-down could be given but that he hoped to keep compulsory redundancies to "an absolute minimum".

Around 500 jobs have already gone mainly through natural wastage.

The group's main offices are in Woking, Birmingham, Edinburgh and London.

Telewest's finance director Charles Burdick said the group had enough cash to survive for 15 months in a worst-case scenario.

He rejected suggestions Telewest was six months behind NTL, which axed 4,000 UK jobs before restructuring its finances.

"We have good medium term liquidity and we have options and that is an important difference," he said.

Results for the first quarter of the year showed underlying earnings at Telewest were continuing to climb, up 34% at £91 million.

Total turnover in the three months to end-March edged up 4% to £334 million, with revenues in the consumer arm ahead 11 per cent at £227 million.

Mr Singer said the results marked the "seventh straight quarter of good operating results" despite the weak telecom and advertising market.

He said the group now had 148,000 broadband customers while its average monthly revenue per household was at a record £41.97.

Around 27,000 broadband connections were sold alone last month with 107,000 customers now taking Internet as well as the television and telephone.

"While BT talks broadband, we sell it and every day we provide sanctuary for ITV Digital refugees," Mr Singer said.

Telewest has been offering special deals to ITV Digital users living in its franchises to encourage them to switch to cable.

Pre-tax losses in the quarter were cut back to £167 million from £208 million in the same period last year.

But after surging initially, Telewest's shares were up just .25p at 10.75p in early trading in the City as investors digested the news.