Loss Narrows As Broadband Grows At Telewest
UK cable operator, Telewest Communications, has this morning posted its first half financials, after a period which newly-installed managing director, Charles Burdick, described as a ‘tough quarter’. Burdick has just taken over the top position at the indebted business, after previous chief executive, Adam Singer, was ousted by the Board (see Telewest Chief Executive Removed In ‘Boardroom Coup’).
However, this was largely offset by a £10 million reduction in Content Division revenues, mainly due to the closure or sale of non-core businesses and a £7 million reduction in Business Division revenues due to weakness in the carrier market, the company said. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 30% to £184 million.
Demand for high-speed internet The success story of Telewest at present is its broadband internet service, which has proven to be very popular. The group’s Blueyonder service now has 192,000 subscribers. In less than two months, 15,000 users have signed up to the new 1 megabit service, demonstrating a real demand for high-speed access.
Heavy debt Despite this success in broadband uptake, Telewest is still sitting on a debt of around £5.3 billion. A restructure of the business therefore now seems inevitable.
It is understood that Singer may have been reluctant to strike an immediate deal with the company’s creditors – a move which will allow the much-needed restructure of Telewest’s balance sheet. The ousting of Singer and installation of Burdick has sparked speculation that such a restructure may now be imminent.
Bondholders are keen to see the debt they are carrying dealt with. A debt for equity swap could be on the cards; this move was effectively forced on rival company NTL as it faced a financing crisis (see NTL Rescue Plans Revealed).
It is not surprising that bondholders are feeling twitchy; shares in Telewest Communications have fallen to rock bottom over the last year or so, as the graph here demonstrates. By late morning stock was virtually unmoved, hovering around the 2p mark.
