Telewest and NTL keen to merge

DEBT-LADEN cable firms Telewest and NTL are moving closer to a merger as each takes steps to sort out its balance sheet. Telewest has already begun talks with bondholders and today will seek shareholder approval to sell its 16.9% stake in Virgin-radio owner SMG. Rival NTL will tomorrow have its final court hearing in the US to sign off its debt-for-equity swap.

Both groups are keen for a merger after debts have been restructured. Telewest is some months behind NTL, but reckons it can secure a debt deal by the end of the year. Shareholders are likely to be left with less than 5% of the equity and could even be left with just 1%.

More jobs cuts are likely. Telewest has already shed most of the 1,500 staff who were earmarked for the chop in May.

Since taking the helm last month, new boss Charles Burdick has cut a further 20 senior management positions in head office and sees scope for further savings.

The sale of the stake in SMG will raise much needed cash. It is currently worth £45m, but Burdick could get more if he was able to sell to Granada and Carlton, who could use the stake as a platform for a bid. Otherwise the shares will be sold on the open market. NTL has already cut thousands of jobs and sold its Australian broadcast business.

Stakes in football clubs such as Aston Villa and Leicester City will be sold when - and if - their share prices improve. NTL decided not to review a two-year sponsorship deal with Aston Villa when it expired last season. It is still obliged to sponsor Newcastle United for a further two seasons, but would like to stop when the contract expires.