Cable Industry Mulls Consolidation As Telewest Stock Tumbles

The cable industry was under pressure to move towards further consolidation this weekend as Telewest boss Adam Singer hinted that an agreement between his company and rival group NTL may be reached. As a shortage in set-top boxes continues to plague Telewest (see Set-Top Box Shortage Puts Telewest Three Months Behind), the company was surrounded by rumours of an imminent takeover bid.

The group has seen its share price collapse in recent weeks as a result of the set-top box shortage, which has pushed its sales targets back by three months. Friday’s closing price was £1.60 (see Sharewatch) a drop of 7.5% since the start of last week, and a fall of over 250% since prices topped 550p in March this year as its merger with Flextech was finalised and details of its high-speed internet plans were revealed (see Sharewatch).

Telewest has denied that it is in talks with American private equity group Callahan Associates, which is reported to have offered £6 billion for the group. Dutch cable company UPC, which owns 25% of Telewest, has also been mooted as a possible bidder.

Despite denials of talks with potential bidders however, the group is not ruling out the possibility of a merger with its rival NTL. Adam Singer, the group’s chief executive, has hinted that an agreement may be in the pipeline.

NTL, in partnership with CWC, owns most of the UK cable franchises which are not owned by Telewest, and a merger between the two would create a cable digital platform to rival Sky and ONdigital. It is believed that both parties are in favour of further consolidation to increase its power to fight other digital platforms.

A spokesperson for NTL said the group was making no comment on speculation today.

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