Telewest has been cut out of the UK cable consolidation push by Cable and Wireless, which yesterday announced it had entered exclusive talks with NTL to merge their cable and consumer telephony businesses.
Cable and Wireless Communications and Telewest had been in talks for several months and a possible three way deal had been mooted as recently as last week.
In a statement, Telewest chief executive Tony Illsley said he was disappointed by the Cable and Wireless decision.
“We continue to believe that Telewest represents the best merger partner for CWC’s cable interests,” Illsley 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.”
Telecommunications analyst at Ovum, Tim Johnson, said Cable and Wireless might well resume talks with Telewest once a merger with NTL was complete.
“There’s an interesting case for having a major single cable company,” Johnson said. “I would expect Cable and Wireless and NTL to move onto that once they’ve absorbed the first merger.”
Telewest’s reaction possibly stemmed from concern that its own bargaining position would be weakened by a Cable and Wireless/NTL deal, Johnson said.
“From a Telewest point of view, they probably have less leverage if they’re being bid for by a bigger operator,” Johnson said.
A combined Cable and Wireless and NTL operation would have coverage of 11.5 million homes and around half the country’s population.
Director of investor relations at Telewest, Parm Sandhu, said the company’s strong customer franchises in the Midlands, the north west of England and Scotland meant 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 would move towards a model dominated by one major supplier, he added.
A spokesman for Cable and Wireless refused to speculate on whether talks would resume with Telewest once the merger had gone through. Cable and Wireless has not revealed the length of its exclusive negotiation period with NTL.
The merger move follows France Telecom’s announcement last week that it would invest £1 billion in NTL to fund its acquisition of Cable and Wireless’ consumer division. (see Newswire 15 July
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