NTL hit by merger costs

UK cable behemoth NTL on Tuesday announced its first set of full quarterly financial results since its merger with Telewest and more recent closing of the acquisition of Virgin Mobile. As a result, revenues for the three months to the end of June almost doubled from £482m a year ago to £884m. However, integration costs took their toll, resulting in a loss of £196m for the quarter, compared to profits of £74m last year.

Consumer results suffered as a result of the integration of the two cable businesses and strategies to share best practices across the group’s operations. The company expects this impact will continue into the second half as it focuses on improving operational performance, targeting more profitable consumers, and delivering a better experience.

Net customer disconnects for the quarter were 18,900, compared to 62,500 net customer additions in the same quarter last year. Positive customer net additions in old Telewest areas were outweighed by net disconnections in old NTL areas, and the operator expects this to occur again in the third quarter due to credit policy changes at old NTL.

Customer growth was also impacted by higher churn at 1.5 per cent, up from 1.4 per cent for the second quarter of 2005.

Steve Burch, chief executive officer of NTL, said: “As expected, this [merger] did impact overall customer levels slightly. We also achieved £15m of estimated synergy cost savings in this quarter, which puts us firmly on track to achieve the £250m run rate as promised by the end of 2007.”