It only took ten years, but Telewest finally turns a profit

15 Mar 2004

UK cable operator Telewest has reported its first quarterly profit since it was founded nearly ten years ago. The debt-heavy company posted a net profit of GBP79 million for the last three months of 2003, compared with a GBP109 million loss the year before. Whilst Telewest admitted that much of the credit for its landmark achievement must go to the strength of the pound against the dollar, the fourth quarter results were still indicative of an impressive turnaround in the operator’s fortunes as it reported a significantly lower full year loss than in 2002. Net loss for the twelve months to the end of December 2003 was GBP272 million, a massive improvement on the GBP2.23 billion loss of the previous year when the operator was held back by a number of exceptional charges.

Telewest offers cable telephony, internet and television services having entered the UK market in 1992 when United Artists Cable International and Tele-Communications Inc (TCI, now Liberty Media) merged their operations. In 1995 the operator was extended its footprint in the Midlands and the North-West of the UK by merging with SBC CableComms, and has since continued to expand via a series of other acquisitions. Formerly the UK’s largest cable TV operator, Telewest lost its number one position in 1999 when its biggest rival NTL acquired the residential operations of Cable & Wireless Communications. However, both operators borrowed heavily to expand their networks and have since struggled with considerable debt burdens following the collapse of the technology market. The precarious finances of both companies has led to mounting speculation that the pair will merge in a bid to compete with pay-TV giant BSkyB.

In July 2003 Telewest announced plans for a GBP3.5 billion debt restructuring process, and three months later received approval from its lead bankers – including the Royal Bank of Scotland, Bank of New York, Deutsche Bank and Bank of America. Under the terms of the debt-for-equity deal the company will be 98.5% owned by its creditors. Telewest used its results presentation to announce that the restructuring is expected to be complete by the middle of the third quarter of 2004.

By the end of 2003 Telewest had passed and marketed 4.67 million homes, down from 4.7 million at the end of the previous year, of which 1.73 million residential homes were connected, down from 1.76 million. The number of customers subscribing to two or more services rose from 1.23 million to 1.26 million, whilst 16.8% of users took all three services (TV, internet and telephony – known as ‘tiple-play’), up from 10.4%, resulting in average monthly revenue per user (ARPU) climbing to GBP43.42 from GBP41.80. The company also reported 647,986 internet subscribers at the same date, up from 540,445, including 414,609 broadband users, up from 262,219.

United Kingdom, Virgin Media
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