CABLE firms ntl and Telewest could be on course to merge before the end of 2005.

Such a move would save the companies £229m a year, according to analysts UBS Warburg.

Speculation in the industry has been rife for years that the debt-ridden pair will form an alliance to build for the future. Ntl has already emerged from harsh financial restructuring and says it is on a much better footing.

Its operations in the North-East contribute a sizeable part to that good fortune, and the continued uptake of its broadband services is proving positive.

Telewest has lagged behind in the race out of the red, but announced last month that it is in the final stages of renegotiating its debt arrangements.

Both ntl's £2.6bn loan and Telewest's new £2bn bank facility are due to run out at the end of 2005, and financial experts believe it would not be unexpected if a merger announcement was made then.

Anthony Platts, assistant director at stockbrokers Wise Speke, suggested that there was a chance a deal could be struck sooner.

"Telewest is making good progress in its critical financial restructuring," he said.

"The debt-for-equity rescue package will see the bondholders take a 98.5 per cent equity stake.

"As these bondholders are predominantly based in the US, Telewest will then list in the US.

"The financial clout able to be exercised by the bondholders should not be underestimated, however, and it would not be a surprise to see a merger of the two cable companies sooner rather than later.

"The announcement that Telewest's managing director Charles Burdick had met his ntl counterpart Simon Duffy last week, for what was described as an informal chat, leads one to believe a merger may not wait until 2005."