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Thursday, 2 May, 2002, 09:37 GMT 10:37 UK
Telewest to cut 1,500 jobs
Cables, Eyewire
Domestic broadband customers are spending more.
UK cable operator Telewest has said it plans to cut 1,500 jobs in an effort to save up to 50m ($73m) over the next 12 months.

The layoffs were "a necessary but painful response to market conditions" in order to stabilise the firm's financial future, said chief executive Adam Singer.


We are in a climate in which capital is scarce and we have to respond to that

Adam Singer, chief executive
Most of the job cuts - 14% of the company's total workforce - will come from network operations. The consumer and business divisions will be merged to streamline the company.

Figures for the first three months of this year suggest Telewest's business is gaining strength, with increases in revenue and a reduction in net losses.

But investors remained unconvinced. Telewest shares are slumped near all-time lows, standing at 9.4p in Thursday trading, down 1.1p on the day and more than 5.50, or 98%, down on their tech boom peak.

Debt worries

Both Telewest and rival UK cable operator NTL ran up hefty debts to develop their networks, which deliver a mix of cable TV, internet and phone services.

Investors have recently become anxious about the level of debt and have been voting with their feet by selling the shares.

NTL is in the midst of pulling together a restructuring of its $17bn of debt under which bondholders would accept shares in the company but many are not happy and the firm has held talks this week to keep the deal together.

NTL's debt-for-equity swap has sparked rumours that Telewest may opt for a similar solution for its debts of 5.3bn.

Telewest's chief executive stressed the job cuts and the firm's plans to slice 50m off capital expenditure were to convince investors it was serious about sorting out its finances.

"Despite good operational improvement, we recognise the capital markets [have] doubts about the sector and... require us to do even more," said Mr Singer.

"We are in a climate in which capital is scarce and we have to respond to that."

Losses narrow

Core profits for the first three months of 2002 rose 34% to 91m, compared with 68m in the January-to-March period of last year.

Telewest reduced its net loss for the period to 166m from 209m a year earlier. This figure includes a number of items excluded from the "core" figure.

Sales grew 4% to 334m, but revenue from potentially lucrative business customers fell 6%. Domestic customers yielded 11% more revenue than a year ago.

Average monthly revenue per household climbed to 41.97, its highest ever level. Telewest has 1.78 million domestic subscribers.

Its blueyonder broadband internet service gained 27,000 subscribers in April and has 148,000 altogether.

Fragile

Attention on the cable companies has increased following the collapse of digital terrestrial broadcaster ITV Digital.

This leaves the fragile cable company businesses as the only existing rival in the digital TV sector to Rupert Murdoch's BSkyB, analysts have said.

It also threatens to derail the government's plans to switch off the analogue signal by the end of the decade, analysts say.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Rebecca Marston
"The layoffs were a necessary but painful response to market conditions"
See also:

02 May 02 | Business
Can cable deliver?
02 May 02 | Business
NTL to file for bankruptcy
26 Apr 02 | Sci/Tech
BT's broadband domination plan
15 Apr 02 | Business
Telewest shares hit new low
17 Apr 02 | Sci/Tech
Rural residents demand broadband
13 Apr 02 | Sci/Tech
Britons dash for broadband
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