Microsoft has ditched its 23% stake in UK cable operator Telewest Communications, indicating that the UK cable and interactive TV sector is not as attractive a market as it once was. The holding has been taken up by US telecommunications group IDT for $5 million in cash (£3 million).
Microsoft has gradually disposed of and written down investments in cable groups as a result of these market conditions. Reports claim the company has written off $7 billion in this way since over the last two years.
The opportunity to take the 23% holding in Telewest has also been declined twice by US media group, Liberty Media. Liberty, which already owns 25% of Telewest, had the right to buy the stake from Microsoft but withdrew on one deal as a result of weak markets and passed up completely on a further opportunity (see Liberty Media Passes Up 25% Telewest Stake Opportunity). Liberty Media will not receive the same first refusal rights now that the stake has passed over to IDT.
Telewest is about to emerge from a complex debt for equity swap in which the group will convert £3.5 billion of debt to shares. This will still leave the company with £1.8 billion of debt.
Shares in Telewest Communications were down by 4.7% at 2.1p this afternoon.