In the past two years, NTL has been on a $34bn spree, buying and upgrading regional cable television franchises across the UK. Now it claims a unique position in the broadband telecoms market with the ability to deliver bundled internet, interactive television and telephony services with a single bill, to half of UK homes, and a third of business premises.

When NTL acquired the UK cable business of Cable & Wireless (C&W) Communications in July last year for $13.1bn, it was catapulted from the number three position to the UK's biggest cable operator, with 3m customers and a network passing 12m homes.

With other acquisitions in Europe, including IG Networks in France, Cablelink in the Republic of Ireland and Cablecom in Switzerland, NTL is also now the largest cable television company in Europe. As in the UK it plans to upgrade these networks to provide broadband services.

The C&W cable division was the largest of a string of acquisitions through which NTL has built a coherent national cable business from a patchwork of regional franchises. The prospect remains that NTL will complete the process of amalgamating all the 27 original cable TV franchises by buying the number two UK operator, Telewest, to create a national cable monopoly.

But for the time being it is digesting C&W Consumer Co and other companies it has acquired, (see table, right), and countering any doubts about its financial viability by raising $1bn through a sale of bonds, announced last week.

NTL is pumping $11bn into upgrading its UK networks to create a broadband network capable of offering digital television, telephone and fast internet access. It aims to exploit this investment by persuading residential customers who currently buy analogue TV and/or telephony to upgrade to interactive television and internet services.

"We will be the provider of communications to the home, whether it goes to the TV, the PC, the telephone or the toaster," says Stephen Carter, managing director for UK and Ireland. "And we will not just own the pipe, but have a position in all the content stream and provide ASP [application service provider] services for other content providers."

A five year deal with BSkyB under which NTL will carry all Sky's main channels for five years is being scrutinised by regulators, and NTL is also having discussions with AOL/ Time Warner on a European content deal.

NTL will also use the network, which passes 400,000 business premises, to sell broadband services to small- and medium-sized companies (SMEs) that cannot afford a private network.

But first there is some fence mending to do. The C&W business was not in good shape, with technical and service shortcomings leading 2.5 per cent of customers to desert each month. NTL says this churn rate has been cut to 1.7 per cent per month.

Similar disaffection has hit the Westminster area of London, a franchise acquired from BT. To compound these inherited problems, NTL scored an own goal by failing to cope with the demand for NTLworld, its free internet access service.

Upgrading the network

The impact of these shortcomings is illustrated by the fact that in the past year NTL was the subject of the most complaints to the consumer rights page in the UK newspaper, The Guardian.

The profile, influence, and one infers, special pleading of some of the customers affected, means Mr Carter is acutely aware of these problems. "We have lots to do, and are concentrating on that on a daily basis," he says. The situation in London is so embarrassing that NTL has put in a dedicated management team, and 30 per cent of its infrastructure investment for 2001 will be devoted to the UK capital.

Upgrading network infrastructure is only part of the answer, as Mr Carter acknowledges. "When we acquired C&W's cable business, we bought a company that was the same size as we were then. We still have a lot of integration to do to get it to work as one entity, and one way. And we have eight other companies to integrate as well."

Following a review in November 2000, NTL said it would make 1,300 staff redundant, leading to significant cost savings from the second half of 2001. Then earlier this month, Mr Carter said he was stepping up the integration process, leading to additional, unspecified job cuts. The November review also identified ways to improve efficiency by eliminating duplicate technology, consolidating support functions and pruning management.

These are being put into effect. In the meantime Mr Carter offers the solace that in areas such as Northern Ireland and Glasgow, where NTL has controlled its cable operations for longer, customer satisfaction levels are high.

Although the company is best known for its residential cable services, its corporate services arm, NTL:Business, is the second largest business telecoms supplier in the UK, after BT, with an annual turnover of £524m.

This division has been built up since the acquisition in 1996 of National Transcommunications (the former broadcasting and engineering division of the Independent Broadcasting Authority), from which NTL took its name. NTL Broadcast remains the leading provider of broadcast television and radio services in the UK with revenues of £210m in 2000.

NTL:Business supplies managed services to large corporate customers, and wholesale services to other carriers. It also installs and manages cellular mobile networks.

Mr Carter believes the upgrade of the cable television networks will allow NTL to meet a huge unmet demand for bundled broadband services among SMEs. In September last year it launched Business Essentials, a package including a telephone line, internet access, domain registration, web hosting and technical support, all for a fixed monthly fee. This began as a narrowband service but will be upgraded to broadband during this year.

One gap in the portfolio at present is mobile communications. NTL was in the bidding for a UK third-generation (3G) licence with its joint venture partner France Telecom (which owns 22 per cent of NTL), but withdrew. Instead, it will enter the market as a mobile virtual network operator (MVNO), via a deal with Orange, the mobile phone operator, which is controlled by France Telecom.

"If you want to be a communications aggregator, a critical service is mobile," says Mr Carter. "We are in the virtuous position of not being aligned to either 2G, 2.5G or 3G, and not having to spend money on a licence. This allows us to put together a mobile offer which does exactly what the customer wants."

As the owner of the UK's largest cable network, NTL is now taking on the satellite operator, BSkyB in the interactive television market. At the same time it is facing up to BT's dominance in residential telephony, and as the largest provider of broadband services for SMEs. This may look an unenviable piggy-in-the- middle position, but in fact demonstrates the powerful position NTL's network confers in the race to roll out broadband services.

BSkyB had 4.1m digital TV customers to NTL's 530,000 in January 2001, but BSkyB's service falls far short of delivering full internet access. Similarly, BT offers telephony, but most customers must make do with internet access via dial-up analogue lines.

However, Mr Carter wants BSkyB, BT and other competitors to succeed in broadband. "We have got to make the market happen. I want people to understand - and to get broadband like they got mobile."