Another report on Telewest....
FOCUS-Telewest soars as Microsoft
buys in
By Kirstin Ridley
LONDON, May 6 (Reuters) - Shares in Britain's second biggest
cable group Telewest Communications Plc surged on Thursday
after Microsoft Corp (MSFT - news) said it would buy a 29.9
percent stake from U.S. cable group MediaOne Group Inc
(UMG - news).
Telewest shares were trading 12 percent, or 30.5p, higher at 285p by 1330 GMT after earlier
touching 300p.
Some analysts believe U.S. software heavyweight Microsoft, which has already invested $500
million in Telewest's arch-rival NTL (NTLI - news), the Nasdaq-listed third biggest cable player in
Britain, may also be eyeing an investment in number one cable operator Cable and Wireless
Communications Plc (quote from Yahoo! UK & Ireland: CWZ.L).
The Telewest investment, to be paid for through a tax-free exchange of Microsoft shares, is part of a
broader agreement in which Microsoft is taking a $5 billion stake in AT&T Corp (T - news), the
leading U.S. long-distance phone company.
MediaOne, which held effective control of Telewest, recommended a $56.4 billion takeover by U.S.
long-distance giant AT&T Corp on Wednesday.
''It's good news for Telewest in the short-term -- although I have to say that this can only be one
part of a longer-term game plan for Microsoft,'' said Iain Johnston, telecoms analyst at J P Morgan
Securities.
''But Microsoft is a great believer in cable and likes the idea of high-speed cable modem access --
and I would have thought that the only missing piece of the jigsaw as far as they are concerned is
CWC.''
While those aspirations may be resolved by corporate activity in Britain -- Telewest and CWC are
again in strategic talks -- analysts said Microsoft might be keen to control the technology or software
of the cable platform to use the UK as a springboard into the rest of Europe.
And AT&T, which has already sealed a $10 billion global joint venture with Telewest competitor
British Telecommunications Plc, has said it plans one of the largest disposal programmes seen to
date.
The American group has also inherited an indirect 21.6 percent stake in Telewest via a $48 billion
takeover of TeleCommunications Inc of the U.S. -- a holding it is also expected by analysts to sell.
The UK cable sector has seen a big round of consolidation in recent years, leaving three big players.
Cable companies have invested billions in building their networks over the past decade but have yet
to deliver consistent profitability.
Telewest is part of Britain's FTSE 100 index of leading stocks although it does not expect to achieve
pre-tax profitability until 2002/2003.
Maybe Open Cable is getting bought out?
Europe has been a bright spot for CUBE/DIVI set tops.
If anyone has any thoughts on how this might impact the success of Canal+/CUBE/DIVI please make some posts.
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