Telewest and NTL merge

Cable operators combine to create UK's second largest communications company

Telecommunications firm NTL is to acquire rival Telewest to create the country's second largest communication provider.

The deal values Telewest at $6bn (£3.4bn), and is expected to complete sometime in early 2006.

The combined company will have over five million residential customers, 2.5 million broadband subscribers and 4.3 million fixed line telephony accounts. Based on pro forma financial information, the company will have combined annual revenues of £3.4bn.

The merger will combine NTL and Telewest's networks and strengthen its position in the cable TV marketplace.

'This transaction positions the enlarged company for greater success than either company could have achieved alone,' said NTL chairman, James Mooney.

'The company will have additional resources to roll out new product offerings, such as high definition television, video on demand and Voice over Internet Protocol (VoIP).'

Forrester telecoms analyst Lars Godell says customers of the two companies should not expect great changes in the short term, as they concentrate on integration issues.

'Integration is going to take some time. Areas like network operations, billing systems, support functions like marketing and sales, as well as board-level musical-chairs, are all going to take some time to resolve themselves,' he said.

'This deal makes them the number one player in the UK market, but the question with that is will this new huge company be agile enough to deal with new challenges? Bear in mind that 50 per cent of all mergers and acquisitions fail. There are no guarantees that this will work.'