Pre-tax losses at Telewest, Britain's second largest cable operator, doubled in the past year to £520.8m, due to aggressive expansion into digital television and the launch yesterday of a high-speed internet service, interactive television and email.
Tony Illsley, the chief executive, blamed a leap in costs related to recruiting more staff for its new media services as well as an increase in other administration costs. Costs before depreciation and amortisation jumped 45% to £571m in the year.
Revenues rose 47% to £793m, benefiting from Telewest's capture of 100% ownership of its former cable subsidiaries, General Cable and Birmingham Cable.
"Our customer loyalty, usage and revenue are all noticeably increased," Mr Illsley said yesterday.
The company balanced reporting of widening losses by announcing that it has achieved 110,000 digital television customers since launching the service five months ago. Almost half are new customers to Telewest.
The group expects to reach 500,000 digital subscribers by the year-end.
"Today is the time when Telewest steps into the whole broadband world and really leverages off our broadband network," Mr Illsley said.
Telewest said that its new internet service, Blueyonder, which is claimed to be 15 times faster than current connections, would be available in a £50 monthly package with unlimited access. That charge is additional to telephony and television subscription fees.
The company expects to secure 40,000 subscribers to Blueyonder despite criticism of the cost. Its existing unlimited internet package, Surf Unlimited, costs £10 a month.
Analysts were sceptical of the subscriber target for Blueyonder and said the price for high-speed internet would have to fall dramatically. Telewest also disclosed the design of its own portal which will carry interactive facilities such as TV-based email and electronic shopping.
Separately, the group is examining a flotation of its joint venture with Andersen Consulting that is developing broadband technology and services.
Telewest said that its monthly revenue per household increased 4% to £35 in 1999. It had originally forecast that revenue would grow to £50 in five years and £70 in 10 years. The company now considers that those forecasts might be conservative, considering the rapid takeup of its digital television product.
Churn rates also fell, with that for Telewest's television offering down 2.9% to 26.1% and for telephony 20.1% lower.
Telewest has 1.6m residential customers, up by 151,000 in the year. Its cable network passes 4.7m UK homes.
Mr Illsley said the multi-billion pound merger with the pay-TV programme company, Flextech, remains on track after recently gaining full regulatory approval.
Once the merger occurs Telewest intends to hand over control of content creation and packaging to Flextech, while it continues purely as the distributor.
Flextech also announced 1999 results yesterday, delivering a pre-tax profit of £5.1m compared with a loss of the same order in the previous year.
The combined company is not expected to post a profit until 2004.
Telewest shares jumped 45p to 469.75p, while Flextech rose 175p to 1,740p.
