Microsoft directors quit Telewest board

Software giant Microsoft withdrew its directors from the board of British cable company Telewest Communications today as part of a review of its position in the heavily indebted firm.

Microsoft, which owns 23.6% of Telewest and has the right to appoint three board members, told the three to stand down as non-executive directors at Britain's second-biggest cable firm.

'At present we believe that we will be in a better position to manage our relationship with, and investment in, Telewest without board representation,' Microsoft said in a statement.

Telewest is saddled with £5.3 billion sterling of debt, amassed during the telecoms and media acquisition frenzy, and its shares have collapsed on fears that it may have to do an 'NTL' - handing over control to its bondholders.

Liberty Media is Telewest's other main shareholder, with a quarter of the firm, and the US-based cable group is widely expected to bid for all of Telewest eventually as part of its plans for European expansion.

Telewest has discussed its financing options with its major shareholders, but insists that a debt restructuring is unnecessary as long as it continues to meet financial targets. But many investors expect it to follow rival UK cable firm NTL, which recently announced a $10.6 billion debt-for-equity swap, handing control to its bondholders.

As their networks do not overlap, the two are widely expected to merge once they are free from their debt burdens.

Telewest and NTL compete with former state telecoms monopoly BT Group in telecoms services and with dominant pay-TV group BSkyB in subscription television. Telewest announced earlier this month it would cut 1,500 jobs in an effort to save up to £50 million sterling a year.