Telewest digital delay ups merger pressure LONDON, Aug 7 (Reuters) - Shares in British cable TV operator Telewest climbed sharply from 20-month lows on Monday as analysts tipped the company as a possible merger target for United Pan-European Communications.

Telewest climbed as much as 15 percent before a third mooted bidder, cable operator Callahan Associates of the United States, flatly denied a report that it had made an offer for Telewest.

The shares remained 6.25 percent higher at 170 pence at 1130 GMT as analysts highlighted the need for Telewest to seek a partner that can strengthen its challenge to satellite rival British Sky Broadcasting Group Plc .

Telewest, Britain's second biggest cable company, has been hammered by the stock market in the past two weeks because of a delay to the roll-out of its digital service.

A shortage of memory chips for its set-top decoder boxes has put back by three months its efforts to stop subscribers defecting to the dozens of channels and interactive features of BSkyB's digital service.

That has reinforced a long-held view among analysts that Telewest on its own does not have the financial muscle or national reach to compete with BSkyB, even after its merger in April with programme distributor Flextech.

"They're never going to be able to compete with a national player," said Greg Main, telecoms analyst at ABN Amro. Telewest has 1.1 million subscribers, including 179,000 on digital, compared with BSkyB's 3.6 million for digital alone.

http://www.mediacentral.com/channels//tv/08_07_2000.reutr-story-L07279753.html

-- Doris (reaper1@mindspring.com), August 08, 2000