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Telewest, NTL edge closer
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August 9, 2001: 5:31 a.m. ET
Report: Deeper partnership for UK cable firms, but no merger for now
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LONDON (CNN) - NTL and Telewest are expected to merge some operations before the eventual consolidation of the UK cable industry, a report said on Thursday.
The British cable operators are considering entering into partnerships for purchasing and retailing and may share customers, the Financial Times reported.
Both are concerned by increased competition from rival telecom and pay-per-view television operators. They have already merged advertising operations and have launched a joint campaign to promote broadband services.
A full merger, however, is still some way off because of the high level of debts at both companies, the report said. NTL owes £10.9 billion ($15.5 billion) and Telewest's debts amount to £4.8 billion.
Stephen Carter, managing director of NTL and Philip Jansen, his counterpart at Telewest, are heading a joint effort to cut costs and improve efficiencies at the cable companies, the report said.
"Everybody understands the rationale for the merger of these two businesses but, in the meantime, there are some benefits we can get from co-operation in certain areas," Jansen told the FT.
A working group has also been established to explore the joint procurement of hardware, in particular the set-top boxes that connect customers to digital TV services, the report said.
The two companies, whose franchise areas are separate, pass about 16 million UK homes and together have 1.5 million digital customers.
They also plan to encourage customers moving house to take up an identical cable package at a discount rather than switching to UK rivals Sky Digital (BSY) or ITV Digital, the report said.
NTL and Telewest are also expected to close their high street outlets and could pitch jointly for a sales presence at a national retailer, the report said. Most cable subscriptions are currently secured over the phone or through direct sales.
NTL (NTLI: Research, Estimates) shares fell 2.3 percent in New York on Wednesday to $9.51. Telewest (TWT) shares fell 2.5 percent to 76.9 pence in London trading on Thursday. 
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