HAMPSHIRE-BASED cable operator NTL is squaring up to BSkyB and BT by taking over rival Telewest for $6 billion (£3.4 billion).

The long-anticipated merger will create the largest provider of residential broadband services in the UK.

The NTL/Telewest merger will also be the second-largest communications firm behind BT, helping it to roll new technology such as video-on-demand and phonecalls over the internet.

Telewest's Flextech content division, which includes Living TV and UKTV, is also expected to be a key part of the business.

The wider group, which has not yet been given a new name, will also have 3.3 million pay TV subscribers, increasing its power to compete against industry leader BSkyB which has more than seven million users.

It will have five million subscribers across its operations with 4.3 million of them taking telephone services and 2.5 million using broadband.

NTL chief executive Simon Duffy, who will be at the helm of the new company, described the merger as a "transforming transaction for the UK cable industry".

There will be redundancies as the merged company eliminates duplicated activities but Mr Duffy said it was too early to say how many jobs would go.

NTL employs about 10,000 people and Telewest has 8,400 staff in the UK.

The enlarged company is set to benefit from Voice over Internet Protocol (VOIP) technology - which allows people to phone over the internet - since it provides the broadband cables needed to operate it.

NTL hopes to complete the takeover by the start of next year.

It is expected to avoid regulatory concerns because there is little geographical overlap between the two sides.

NTL and Telewest are both listed on the US Nasdaq index.

NTL is bigger by turnover but the two are almost identically valued at around $5.5 billion (£3.13 billion).

Under the deal, NTL is offering Telewest shareholders $16.25 (£9.27) in cash plus 0.1115 NTL shares for a total consideration worth $23.93 (£13.65) per share.

The offer represents a small premium to the $22.95 (£13.09) closing price of Telewest shares on last week's markets.

First published: October 3