UK float to value Telewest at pounds 1.8bn: Cable television network for expansion

Telewest, the largest cable television operator in the UK, is to float on the London Stock Exchange, valuing the company at up to pounds 1.85bn, writes Mary Fagan.

Telewest is jointly owned by US West, a US regional telephone company, and Tele-Communications Inc, the biggest cable company in the US. Telewest owns 16 UK cable television franchises and has stakes in a further seven, covering 3.6 million homes. The franchise areas include South London, Avon, the Cotswolds, Tyneside and several large Scottish towns and cities.

Telewest plans to raise about pounds 350m by listing 25 per cent of its shares, primarily in London but also in New York.

Money raised will help to finance the building of Telewest's networks, which are due for completion in 1998. The company has spent pounds 500m on its cable television and telephone systems and the total investment is expected to reach pounds 1.25bn.

Alan Michels, chief executive, said the listing would also help raise the company's profile in Britain. 'Our investment, consumers and customers are in the UK and we want a UK presence,' he said. He could not predict when the company would be profitable.

Mr Michels said that, in addition to normal cable television and telephony, the company planned to offer interactive services and pay-as- you-view television soon. 'Services are constrained only by the imagination of entrepreneurs in the marketplace,' he said.

Kleinwort Benson and Goldman Sachs have been appointed as the merchant banks jointly co-ordinating the sale worldwide. The pathfinder prospectus will be issued in early June followed by a roadshow in the UK and North America. The flotation is expected to be complete in late June or early July.

Telewest is one of several cable companies expected to seek listings this year.