Telewest has been cut out of the UK cable consolidation push by Cable & Wireless Communications, which last week announced it had entered exclusive talks with NTL to merge the pair's cable and consumer telephony businesses.
C&WC and Telewest had been in talks for several months and a possible three-way deal combining Telewest, C&WC and NTL had been mooted.
In a statement, Telewest CEO Tony Illsley said he was disappointed by the C&WC decision. "We continue to believe that Telewest represents the best merger partner for C&WC's cable interests," he said. "The momentum in Telewest's business is strong and we shall continue to focus all our efforts on developing it and releasing the full potential of broadband cable."
Ovum telecoms analyst Tim Johnson said C&WC might resume talks with Telewest once a merger with NTL was complete.
"There's an interesting case for having a single major cable company," Johnson said. "I would expect C&WC and NTL to move on to that once they've absorbed the first merger."
Telewest's reaction possibly stemmed from concern that its own bargaining position would be weakened by deal between C&WC and NTL, Johnson said.
A combined C&WC and NTL operation would have coverage of 11.5 million homes and around half the UK's population.
Parm Sandhu, director of investor relations at Telewest, said the company's strong customer franchises in the midlands, the north west of England and Scotland mean its future negotiating position would not be weakened.
"With that kind of footprint, we are always going to have a strong bargaining position," Sandhu said.
He denied a merger between Telewest's two competitors would place it at a competitive disadvantage in the meantime.
"We believe we have a much stronger growth trend than either of the other two," Sandhu said.
Telewest continues to believe that the UK cable market will be dominated by one major supplier, he added.
A spokesman for C&WC refused to speculate on whether talks would resume with Telewest once the NTL merger has gone through. C&WC has not revealed the length of its exclusive negotiation period with NTL.
The NTL deal follows France Telecom's announcement (see PC Week, 20 July) of a £1 billion investment in NTL.
NTL TAKES OVER BT CABLE FRANCHISES
- NTL has taken over BT's Westminster and Milton Keynes cable franchises.
NTL agreed to pay a total of £19 million last week for the franchises, which together cover about 210,000 homes, and has signed a long-term lease for the networks, valued at £3.9 million annually. NTL plans to spend about £15 million upgrading the infrastructure for digital cable, interactive services and high-speed Net access.
A spokesman for BT said cable television was not a core business for the firm. The Milton Keynes and Westminster were BT's only remaining operations.
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