Telewest hit by debt

August 2, 2001 Posted: 0814 GMT

LONDON (CNN) -- Telewest Communications said on Thursday its second-quarter loss widened as it paid for acquisitions and interest on debts.

The smaller of Britain's two leading cable operators saw its loss increase to £185 million ($265 million), or 6 pence a share, from £163 million, or 6p a share, a year earlier. Sales rose 19 percent to £315 million.

Telewest said it had net debt of £4.79 billion at June 30, up from £4.56 billion at the end of the previous quarter. The company said acquisition and interest costs contributed to increased net loss.

Telewest, which is 25.2 percent owned by U.S. programming giant Liberty Media (LMG: Research, Estimates) and 24 percent by Microsoft (MSFT: Research, Estimates), has seen its share price drop by almost a third this year amid concerns it may not have enough money to expand.

Its stock, which last week fell to a low of 61.25 pence, rose almost 10 percent to 79.1 pence in early London trading, after operating profit met analysts' forecasts. 

Earnings before interest, tax, depreciation and amortisation (EBITDA) -- a measure of a debt-laden company's profitability – rose to £74 million in the three months to June 30, from £52 million a year earlier. Analysts polled by Reuters forecast EBITDA of around £71 million.

Telewest competes in the cable business with the bigger NTL (NTLI: Research, Estimates), a New York-listed company, while British Sky Broadcasting (BSY) and ITV Digital are other rivals in the pay-TV arena and British Telecommunnications (BT-A) heads the competition in the martket for UK telephone services.

The cable company said monthly revenue per household increased to £39.29 from £38.80. Telewest said it has the highest-spending customers of any European cable company, with revenue boosted by the fact that growing numbers of users buy more than one Telewest service.

"This is Telewest's fourth straight quarter in a row of subscriber growth, rising average revenues and falling churn, delivering strong EBITDA margins of 22 percent and growing EBITDA," Chief Executive Adam Singer said.

The number of digital television subscribers rose to 564,000 from 532,000, and the company added 13,000 subscribers to blueyonder, its high-speed Internet service, taking the total to 38,000. In the second quarter, it gained  21,000 residential customers, taking its total to 1.735 million

The rate of churn - the percentage of customers leaving the company - dropped for a third quarter in the TV operaration, falling 1.9 percentage points to 21.8 percent.

Flextech, a recently purchased subsidiary that part-owns cable-TV channels including UK Gold, saw its advertising revenue increase 10 percent, despite a 10 percent decline in the overall TV advertising market, the company said.

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