CABLE operators Telewest and ntl have joined forces to take on rivals BSkyB and BT.

The long-anticipated merger, which involves the takeover of Telewest for £3.4bn, will create the largest provider of residential broadband services in the UK.

It will also be the second-largest communications company behind BT and better-placed to extend new technology such as video-on-demand and services allowing people to make calls over the Internet.

Telewest's Flextech content division, which includes channels such as Living TV and UKTV, is also expected to be a key part of the business amid expected further opportunities in the free-to-air television market.

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

It will have a total of five million subscribers across its operations, with 4.3 million taking telephony services and 2.5 million using broadband.

Chief executive of ntl 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 also be substantial savings as the company eliminates duplicated activities, although Mr Duffy said it was too early to say how many jobs would be lost.

Ntl employs about 10,000 people and Telewest about 8,400 in the UK. There is little geographic overlap between their operating areas. Ntl has a large call centre operation in Stockton, Teesside, and Telewest employs hundreds at another contact centre in Gateshead.

A spokeswoman said yesterday it was inevitable that jobs would go, though she said that the merged company would not have any fewer customers and so customer-facing roles were unlikely to be seriously affected.

Mr Duffy said the enlarged company was well-positioned to benefit from Voice over Internet Protocol technology - allowing people to communicate over the Internet.

Telewest and ntl have emerged from bankruptcy protection following painful restructuring programmes and are now listed on the Nasdaq exchange in New York.

Telewest, based in Woking, Surrey, which provides multi-channel television, telephone and Internet services to UK households, completed its £4bn restructuring last July.

Ntl, based in Hook, Hampshire, emerged from bankruptcy protection in 2003 and began a financial overhaul to generate capital and reduce interest repayment charges.

Analysts had long expected the debt restructuring of the two companies to result in a merger, which ntl hopes to complete by the start of next year.

It is expected that the tie-up would avoid regulatory concerns because of the lack of geographical overlap between the two companies.