Cable giants NTL and Telewest today announced their long-awaited merger, a deal that will create a major player in TV to take on Sky, Freeview, ITV and BT.
The companies, which have been weighed down by financial problems in recent years, hope their tie-up will strengthen cable as a force in television.
With 3.3m households tuning in to their TV services, they currently trail Sky's 7.8m households and Freeview's presence in more than 5m of the nation's homes.
The £6.5bn deal creates the UK's second largest communications company after BSkyB, and the leading provider of "triple play" services - TV, broadband and telephony.
The merged company will supply 2.5 million customers with residential broadband services and provide fixed line telephony to 4.3 million subscribers.
Under the deal, NTL will acquire Telewest for $6bn or $23.93 a share, in a mixture of cash and shares.
"The combined company will have the benefit of a much larger cable network and, together with Telewest's content division, will strengthen cable's position in the multichannel TV marketplace," NTL and Telewest said in a statement.
"Additionally, the transaction will create substantial synergies and provide the impetus for increased product and technical innovation."
Synergies from the deal are estimated at £1.5bn, net of the costs involved in achieving them.
Based on the year ending in June, the combined company would have had revenues of £3.4bn and operating income before depreciation, amortisation and other charges of £1.2bn.
Upon completion of the deal, Telewest shareholders will own approximately 25% of the enlarged NTL.
The deal, which is expected to close in the first three months of next year, is subject to regulatory approval and shareholder votes.
The NTL boss, Simon Duffy, will take on the job of president and chief executive, while Telewest's Barry Elson will leave the company.
NTL's James Mooney will be chairman of the enlarged company's board, which will consist of all the current directors of NTL plus two directors from Telewest, including chairman Cob Stenham.
Mr Duffy said: "This is a transforming transaction for the UK cable industry. It marks not just the culmination of a decade of consolidation but, more importantly, the creation of a new competitive force in the communications and entertainment sectors in the UK."
The merged company's net debt after the deal will be about £5.7bn.
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