NTL confirms talks

France Telecom eyeing stake in cabler

By ERICH BOEHM

LONDON -- NTL has confirmed that it is in advanced talks that could lead to France Telecom taking a minority stake in the U.K. cabler, reportedly to fund a $12.4 billion bid for the residential business of Cable & Wireless Communications, Britain's largest cable operator.

The French telco is believed ready to invest $5 billion in a deal between NTL and CWC that should be finalized next week. This pact would derail a merger between CWC and Telewest, the third U.K. cable company.

CWC and Telewest have been in talks since April. Telewest is understood to be preparing its own bid of cash or shares to CWC shareholders. A joint Telewest/NTL bid backed by Microsoft, which holds 29.9% of Telewest and 5% of NTL, is also possible, but unlikely given the complexity of such a deal.

The prize in all these ventures is CWC's 1.2 million residential customers.

NASDAQ-listed NTL is the most acquisition-minded of the U.K.'s cablers, building its British operations in the last 18 months by picking up small cable companies, and branching out into Ireland, France and Australia.

France Telecom has been looking to expand after the breakup of its former monopoly at the beginning of 1998.(Michael Williams in Paris contributed to this report.)