Telewest-NTL merger possible: Burdick
Cable Guys get it on
UK cable company Telewest expects to be cash-flow positive by the fourth quarter, and a merger with NTL could be on the cards, the firm's managing director has said.
Telewest boss Charles Burdick has predicted that the company will begin generating money in its fourth quarter, according to a report in the Wall Street Journal. This would follow the completion of the company's debt refinancing plan that has seen 97 percent of Telewest taken over by creditors.
More significantly, Burdick has said that at the beginning of next year, a merger could occur with NTL, which runs cable networks in the UK and Ireland. For its part, NTL declined to comment on the possibility, but speculation over the two firms combining their operation has been lingering for months.
It is generally thought that a merger between the two companies could create the only viable competition to satellite TV company BskyB and its ever-expanding subscriber base. A merger between Telewest and NTL would also establish a more formidable competitor to BT in the fixed-line consumer and small business broadband market.
Since the two companies have few overlapping operations, it seems unlikely that regulatory hurdles would hold back such a combination. Thus far, the overwhelming debt that the companies have accumulated has been the main obstacle to a merger, but with much of that debt now gone, industry talk of a merger between the two firms has resumed.
In its bankruptcy plan, NTL was divided into two distinct companies, NTL UK and Ireland, and NTL Europe. The former company also exchanged about STG7 billion in debt for control of the firm by creditors. A similar plan on the part of Telewst is set to be completed by the end of March, which will see STG3.5 billion of its STG5.3 billion in debts forgiven in return for handing control of 97 percent of the company to lenders.
In his update on Telewest's restructuring, Burdick said the plan should be completed in the second quarter. Burdick also said that Telewest could be the first cable company globally to turn cash-flow-positive. "Our plans show the second quarter '04 for cash-flow-positive, but I have the team focused on internal targets that move that up to the fourth quarter of 2003," he is quoted as saying in the Wall Street Journal.
NTL in Ireland, previously known as Cablelink, employs about 480 and it is the biggest cable provider in Ireland, dominating the Dublin market and along the east coast.