Cable group Telewest and pay-TV company Flextech, which are in the midst of a £2.3 billion merger, both reported poor year-end financial results today. The merger, which will create a vertically integrated company worth more than £12 billion, was cleared by the Department of Trade & Industry earlier this month (see Telewest And Flextech Merger Cleared By DTI).
Telewest saw a rise in its earnings before interest, tax, and depreciation during 1999 of 52% to £222 million, but its pre-tax losses before extraordinaries rose from £314 million to £481 million. Its customer base rose to 1.6 million homes during last year, an increase of 35.7%.
Announcing the results, Telewest launched the UK’s first high speed cable internet service, Blueyonder. Offering unlimited 24 hour a day usage and connection speeds ten times faster than existing internet use, it links computers to the internet via broadband cable rather than the cable used for phone services.
Blueyonder will initially be launched in homes in the south-east of England and will cost £50 a month. By summer Telewest will introduce further broadband applications for PCs including live video and ‘instant’ music downloads.
It will be a direct competitor with BT’s ADSL service, which expands ordinary telephone wires to provide similar connection speeds and is due to launch by the end of this year. Telewest recently pipped the telecoms giant to the post with the launch of its unmetered internet service in February (see Telewest To Launch Britain’s First Unmetered Internet Service).
The group’s Active Digital service launched in October last year (see Telewest Launches Digital Service) and now has 110,000 customers. An interactive service available to subscribers has now signed up over 60 retailers and content partners (see Telewest Builds Interactive Service To Rival Open) and will be available from 27 March.
Flextech reported an operating loss of £14 million in its year-end results as digital migration and increased investment took its toll. The sale of its share in TV Travel Shop gave an exceptional profit of £14.8 million. Excluding this, however, the group saw pre-tax losses of £9.7 million.
Flextech’s e-commerce and internet division, Flextech Interactive, however, saw its revenue increase 397% to £1.8 million. It recently signed a deal with ticket agency Way Ahead (see Flextech Interactive Buys Ticket Agency). UKTV, the group’s joint venture with the BBC, is forecast to move into operating profit this year. Flextech’s share of its losses fell last year from £12.2 million to £4.4 million.
A 2:00pm today, Telewest’s shares were up 31¼p to 475½p and Flextech’s stock had shot up 140p to £17.50.
Flextech: 020 7299 5000 Telewest: 01483 750 900
