Stenham to quit as Telewest chairman: report

Cob Stenham could stand down from the position of Chairman at Britain's second largest cable operator, Telewest, according to a report in the Observer.

The paper reported on Sunday that Stenham would quit as Chairman - but probably stay on as deputy chairman or as a consultant to the company - during a massive clear-out of all non-executive directors on the company's board. The move would coincide with the completion of Telewest's debt-for-equity refinancing, which, again according to the Observer, could be announced within a fortnight.

Despite continued strong take-up of Telewest's broadband internet service blueyonder, which continued to provide a fairly solid operational basis for the company, high levels of debt necessitated the announcement in September last year that the company was seeking to agree terms for refinancing with bondholders. The restructuring is expected to be similar in shape - if not in total size - to that of Britain's largest cable operator, ntl, which emerged from a similar process in January this year. Around £3.5bn of the company's debt is expected to be cancelled, to be replaced by 97% of ordinary shares in a new Telewest - effectively handing control of the company over to bondholders in a debt-for-equity swap. Current shareholders would, under this arrangement, get the remaining 3% of Telewest's issued ordinary share capital. The current share price of 2.14p for Telewest's stock in London represents an acknowledgement among investors that this arrangement is likely to be the final form of the refinancing when eventually revealed.

It should be noted, however, that despite whatever wrangling - be it in the shape of a board shakeup and/or a successful refinancing arrangement - may occur, Telewest's customers are unlikely to notice any difference to their services when they log on to their internet service or switch on their cable boxes. As ntl demonstrated during its restructuring, it is perfectly possible to go through such a process, even to enter bankruptcy protection, and maintain operations successfully.

The Observer report does however hint at something that would result in changes for Telewest's customers; a merger with ntl. The paper reports that this could happen as early as next year. While it would not be prudent to dismiss this claim upon sight, it should be taken into consideration that the marriage of Telewest and ntl is something that has been endlessly speculated on ever since various rounds of consolidation in the cable industry resulted in there being just those two big players - there has always been an ongoing round of speculation that the big merger would happen "next year." The two companies already work closely, particularly in "Broadband Cable" marketing to compete with DSL providers, and therefore it seems for the moment at least both are content to keep their operations and financial arrangements separate while choosing to pragmatically co-operate when it is to their mutual advantage to do so. Therefore while on paper it could be desirable for the companies to merge, the fact that they - contrary to reports in some publications - are not rivals, as they do not service the same areas, removes some of the impetus to merge that could otherwise exist.