Indebted Telewest Begins Reorganisation
Telewest Communications, the heavily indebted UK cable company, this morning said that net loss for Q1 2002 fell by 21% to £166 million on the back of EBITDA up 34% to £91 million. It is also planning a radical restructure in order to bring about cost savings.
Total turnover for the quarter ended 31 March 2002 increased 4%, or £13 million, to £334 million. This was driven mainly by revenue growth in the Consumer Division, which was up by 11% to £227 million.
Average revenue per user (ARPU) has hit its highest level, up 8% year on year at £41.97. The company has also seen strong demand for its broadband, high-speed internet service, Blueyonder; 148,000 customers are now signed up to the service.
Chief executive Adam Singer is hoping to reduce Telewest’s capital expenditure to below £500 million this year and to reduce it further after that. There will be a reorganisation of the group in order to achieve this, which will result in the loss of around 1,500 jobs.
The consumer and business divisions – currently managed separately – will be merged into a single operating unit and this will be serviced by a networks and technology division.
It is expected that this reorganisation will produce annual cost savings of £40-50 million in the full year of trading, in addition to the capital expenditure savings.
“The steps we have taken are aimed at helping stabilise our financial future and are a necessary but painful response to market conditions.” said Singer “I believe they will enable Telewest to operate more efficiently going forward. But as would be expected given the current state of the capital markets, the company continues to explore options to address its funding requirements. We recognise that investors need to see evidence that we can leverage our strong operational position into a profitable financial future sooner rather than later.”
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