SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                              ---------------------

                                    FORM 10-K
(Mark One)

[   ]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the Fiscal Year Ended December 31, 1997

                                       OR

[   ]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 For the Transition Period From _____ To ______

                         COMMISSION FILE NUMBER: 0-26840


                           TELEWEST COMMUNICATIONS PLC
             (Exact Name of Registrant as Specified in Its Charter)

                              ---------------------

     ENGLAND AND WALES                                             N/A
      (State or Other                                       (I.R.S. Employer
      Jurisdiction of                                     Identification Number)
     Incorporation or
       Organization)
                              GENESIS BUSINESS PARK
                                  ALBERT DRIVE
                             WOKING, SURREY GU21 5RW
                                 UNITED KINGDOM
                               011-44-1483-750-900
                    (Address of Principal Executive Offices)

                 Securities Registered Pursuant to Section 12(b)
                                   of the Act:

                                      NONE

                 Securities Registered Pursuant to Section 12(g)
                                   of the Act:

                     AMERICAN DEPOSITARY SHARES EVIDENCED BY
                 AMERICAN DEPOSITARY RECEIPTS, EACH REPRESENTING
                         TEN ORDINARY SHARES OF 10p EACH
                                (Title of Class)

                           ORDINARY SHARES OF 10p EACH
                                (Title of Class)



     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES |X| NO [ ]

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY AMENDMENT TO THIS
FORM 10-K. [ ]

     AT MARCH 2, 1998, 927,567,600 ORDINARY SHARES OF 10P EACH WERE OUTSTANDING
AND THE AGGREGATE MARKET VALUE OF THE ORDINARY SHARES ON THE LONDON STOCK
EXCHANGE ON SUCH DATE HELD BY NON-AFFILIATES OF THE REGISTRANT WAS APPROXIMATELY
(POUND)194,764,583.

                       DOCUMENTS INCORPORATED BY REFERENCE

     PORTIONS OF THE REGISTRANT'S ANNUAL REPORT TO SHAREHOLDERS FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1997 ARE INCORPORATED BY REFERENCE INTO PART II.
PORTIONS OF THE REGISTRANT'S DEFINITIVE PROXY STATEMENT, DATED MARCH 31, 1998,
TO BE DELIVERED TO SHAREHOLDERS IN CONNECTION WITH THE 1998 ANNUAL GENERAL
MEETING OF SHAREHOLDERS, ARE INCORPORATED BY REFERENCE INTO PART III.

<PAGE>
                                    FORM 10-K
                                TABLE OF CONTENTS

                                     PART I
<TABLE>
<CAPTION>
                                                                                                                  Page

<S>        <C>                                                                                                    <C>
Item 1.     Business Proceedings..................................................................................  3
Item 2.     Properties Proceedings.................................................................................47
Item 3.     Legal Proceedings......................................................................................47
Item 4.     Submission of Matters to a Vote of Security Holders....................................................47

                                     PART II

Item 5.     Market for Registrant's Common Equity and Related Stockholder Matters..................................49
Item 6.     Selected Financial Data................................................................................56
Item 7.     Management's Discussion and Analysis of Financial Condition and Results of Operations..................56
Item 7A.    Quantitative and Qualitative Disclosure About Market Risk..............................................56
Item 8.     Financial Statements and Supplementary Data............................................................56
Item 9.     Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...................56

                                    PART III

Item 10.     Directors and Executive Officers of the Registrant....................................................56
Item 11.     Executive Compensation................................................................................57
Item 12.     Security Ownership of Certain Beneficial Owners and Management........................................57
Item 13.     Certain Relationships and Related Transactions........................................................57

                                     PART IV

Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................57

</TABLE>

<PAGE>
                                     PART I

INTRODUCTORY NOTES:

         Telewest Communications plc, formerly known as Telewest plc (the
"Company"), was formed for the purpose of acquiring the issued share capital of
Telewest Communications plc ("Old Telewest") and SBC CableComms (UK) ("SBCC") in
connection with the merger of Old Telewest and SBCC on October 3, 1995 (the
"Merger"). Prior to the Merger with SBCC, Old Telewest was a publicly traded
company traded on the London Stock Exchange and SBCC was a private company owned
by affiliates of SBC Communications, Inc. ("SBC") and an affiliate of Cox
Communications, Inc. ("Cox"). In connection with the Merger (a) all of the
issued share capital of Old Telewest and SBCC were exchanged for shares of the
Company, (b) Old Telewest and SBCC became wholly-owned subsidiaries of the
Company (and currently are indirect wholly-owned subsidiaries), and (c) the
Company became a publicly traded company (with its Ordinary Shares traded on the
London Stock Exchange under the symbol "TWT" and American Depositary Shares
("ADSs") representing its Ordinary Shares traded on the Nasdaq National Market
under the symbol "TWSTY"). All references to the Company prior to completion of
the Merger are to Old Telewest or its predecessor business, TCI/U S WEST Cable
Communications Group (a joint venture (the "Joint Venture") between affiliates
of Tele-Communications, Inc. ("TCI") and affiliates of U S WEST, Inc. ("U S
WEST") that owned and operated cable television and telephony businesses in the
U.K. and was contributed to Old Telewest in connection with its initial public
offering (the "Initial Public Offering") in November 1994.

         References in this document to homes "passed" are to homes in respect
of which network construction has been completed, and references to homes
"passed and marketed" are to homes passed where marketing has commenced.
References in this document to the number of "equity homes," "equity homes
passed," "equity homes passed and marketed," "equity businesses," equity
customers" and "equity lines" are to the number of homes, businesses, customers
or lines, respectively, within franchises owned by a company multiplied by such
company's effective equity interest in such franchises (e.g., a franchise with
100 homes in which such company has an effective interest of 25% would represent
25 equity homes for such company). Unless otherwise indicated in this document,
"equity homes," "equity homes passed," "equity homes passed and marketed,"
"equity businesses," "equity customers" and "equity lines" are calculated for
the purposes of this document for all periods on the basis of a company's
effective interest in its franchises as at the date of this document.

         Unless the context requires otherwise, references in this document to
the Company include its direct and indirect subsidiaries but do not include the
Affiliated Companies (as defined herein). All information with respect to the
number of homes and businesses in a franchise area is based on the most recent
published U.K. census data (1991) with respect to homes and the relevant
company's estimates with respect to businesses. All information with respect to
the number of homes "passed" or "passed and marketed" is based on physical
counts made by the relevant company during the network construction or marketing
phases (or in the case of homes acquired after network construction or marketing
was completed by another operator, based on the records of such operator). All
information with respect to the number of homes in an Affiliated Franchise (as
defined herein) is based on the most recent published U.K. census data (1991),
and all other information concerning the Affiliated Companies has been provided
by (or derived from data provided by) the Affiliated Companies.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS:

         All statements other than statements of historical fact included in
this document, including without limitation the statements incorporated herein
from the Company's 1997 Annual Report and 1998 Proxy Statement are, or may be
deemed to be, forward-looking statements within the meaning of Section 21E of
the U.S. Securities Exchange Act of 1934, as amended. Important factors that
could cause actual results to differ materially from those discussed in such
forward-looking statements include, among other things, the extent consumer
preference develops for cable television over other methods of providing in-home
entertainment and for the Company as a viable alternative to British
Telecommunications plc ("BT") and others as a provider of telephony service; the
ability of the Company to manage growth and expansion; the ability of the
Company to improve operating efficiencies (including through cost reductions);


                                       1
<PAGE>
the ability of the Company to construct its network in a cost efficient and
timely manner; the ability of the Company to raise additional financing if there
is a material adverse change in the Company's anticipated revenues or expenses
or to finance new initiatives; the ability of the Company to respond to changes
or increases in competition (including the introduction of digital services by
BSkyB (as defined) or other operators) and adverse changes in government
regulation; the extent programming is available at reasonable costs; adverse
changes in the price of telephony interconnection; disruptions in supply of
services and equipment, and the performance of the Affiliated Companies (which
are not controlled by the Company). All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on
behalf of the Company are expressly qualified in their entirety by such
cautionary statements.




                                       2
<PAGE>
ITEM 1.  BUSINESS

OVERVIEW

         The Company is a leading provider of cable television and residential
and business cable telephony services in the U.K. The Company owns and operates
28 cable franchises (the "Owned and Operated Franchises") and has minority
equity interests in three U.K. cable operators (the "Affiliated Companies"),
which own and operate seven additional franchises (the "Affiliated Franchises").
As of December 31, 1997, the Owned and Operated Franchises and the Affiliated
Franchises covered approximately 25.7% of the homes in the U.K. in areas for
which cable franchises have been awarded. The Owned and Operated Franchises and
the Affiliated Franchises together include approximately 5.2 million homes and
approximately 344,000 businesses, of which approximately 4.4 million and
approximately 290,000 are the Company's equity homes and equity businesses,
respectively. As of December 31, 1997, the Company's network in such franchises
had passed approximately 3,318,000 of the Company's equity homes (approximately
3,097,000 of which had been passed and marketed) and the Company had
approximately 687,000 equity cable television customers, 923,000 equity
residential telephone lines and 117,000 equity business telephone lines.

         The Company's 28 Owned and Operated Franchises, which include
approximately 4.0 million homes, are managed in four Regional Franchise Areas:
London South and the South East (including Croydon, Kingston, Richmond,
Basildon, Chelmsford and Gravesend), Scotland and the North East (including
Dundee, Edinburgh, Perth, Gateshead and Newcastle upon Tyne), Avon, Cotswolds
and the Midlands (including Bath, Bristol, Cheltenham, Gloucester, Telford,
Dudley, Wolverhampton, Walsall, Worcester and Kidderminster) and the North West
(including St. Helens and Knowsley, Wigan, Preston, Southport, North and South
Liverpool and Blackpool). The seven Affiliated Franchises include approximately
1.2 million homes and provide the Company with an additional 401,000 equity
homes. The Affiliated Franchise areas include Birmingham, parts of North London
and Windsor.

         The Company provides a wide variety of cable television, cable
telephony and on line services. Such services are provided over a hybrid
fibre-coaxial network (i.e., high capacity broadband) which has been designed to
enable the Company to provide customers with a wide range of interactive and
integrated entertainment, telecommunications and information services as they
become available in the future. The Company currently provides analogue services
over the network, and expects to begin introducing digital services over the
network in one franchise by the end of 1998. Such digital services may include
pay-per-view programming, near-video-on-demand ("NVOD"), cable television
Internet access, electronic mail, home shopping and banking.

         As of December 31, 1997, network construction was completed for
approximately 75.0% of the homes in the Owned and Operated Franchises and 89.4%
of the Affiliated Franchises and approximately (pound)1,973 million had been
invested in the construction of the network of the Owned and Operated Franchises
and (pound)753 million had been invested in the construction of the networks of
the Affiliated Franchises (in each case including the costs of cable, ducting,
network electronic equipment and subscriber connections). The Company
anticipates that network construction will be completed for more than 77% of the
homes in the Owned and Operated Franchises and 92% of the Affiliated Franchises


                                       3
<PAGE>
by December 31, 1998 and expects that the remaining construction of the networks
will be substantially completed by the end of year 2003.

         In addition to the construction of a hybrid fibre-coaxial network in
each of its franchises, the Company is developing an inter-franchise network to
link the individual networks of the Owned and Operated Franchises and the
Affiliated Franchises (the "Interfranchise Network"), carrying voice, data and
video traffic between the franchises. The Interfranchise Network is expected to
provide a number of benefits to the Company, including increased telephony
margins resulting from reduced payments of interconnection fees to national
carriers for domestic long distance calls. The Interfranchise Network is
scheduled to be completed by the middle of 1998.

         The following table sets forth certain data concerning the Owned and
Operated Franchises and Affiliated Franchises at and for the years ended
December 31, 1995, 1996 and 1997. Except as otherwise noted in the footnotes to
this table, all information with respect to SBCC is included only from and after
October 3, 1995 (the date of completion of the Merger).

<TABLE>
<CAPTION>
                                 Owned and Operated                    Affiliated
                                     Franchises                       Franchises(1)                   Total(1)
                                     ----------                       -------------                   --------
                          1995          1996       1997        1995      1996     1997       1995      1996        1997
                          ----          ----       ----        ----      ----     ----       ----      ----        ----
<S>                     <C>          <C>        <C>         <C>       <C>       <C>      <C>        <C>        <C>
CABLE TELEVISION
Homes passed..........   1,987,344    2,575,142  2,970,168   242,415   316,878  347,563   2,229,759  2,892,020  3,317,731
Homes passed and
marketed..............   1,831,458    2,335,953  2,760,184   235,196   290,882  336,398   2,066,654  2,626,835  3,096,582
Basic customers.......     401,469      528,142    605,988    56,003    71,457   81,364     457,472    599,599    687,352
Basic penetration
rate (2)..............       21.9%        22.6%      22.0%     23.8%     24.6%    24.2%         N/A        N/A        N/A
Average monthly
revenue per
  customer (3)........(pound)21.32(4) (pound)22.95(pound)23.40 (pound)19.16(pound)20.35(pound)21.27     N/A      N/A     N/A
Average churn rate ...    41.0%(5)     33.4%(6)   34.0%(6)  31.5%(5)  28.9%(6) 37.0%(6)         N/A        N/A         N/A

RESIDENTIAL TELEPHONY

Homes passed..........   1,750,288    2,396,658  2,791,684   237,940   299,603  347,913   1,986,228  2,696,261  3,139,597
Homes passed and
marketed..............   1,652,604    2,254,734  2,725,154   229,956   288,307  337,173   1,882,560  2,543,041  3,062,327
Residential customers.     429,405      620,377    810,358    48,250    65,724   84,324     477,655    686,101    894,682
Penetration rate (7)..       26.0%        27.5%      29.7%     21.0%     22.8%    25.0%         N/A        N/A        N/A
Residential lines
connected.............     430,926      627,009    836,168    48,549    66,512   86,372     479,475    693,521    922,540
Average monthly
revenue per
  line (8)............(pound)20.48(9) (pound)20.26(pound)19.19 (pound)27.25(pound)27.05(pound)24.86     N/A      N/A     N/A
Average churn rate
per line .............   21.8%(10)     19.6%(6)   20.0%(6)  23.8%(10) 25.8%(6) 29.9%(6)         N/A        N/A        N/A


BUSINESS TELEPHONY
Business customers....      14,225       20,882    25,475     1,760      2,416    2,856     15,985      23,298     28,331
Business lines
connected.............      40,021       67,823   100,989     7,496     10,746   15,684     47,517      78,569    116,673
Average number of
business lines
  per customer
(11)..................         2.8          3.2       4.0          4.3        4.4      5.5     N/A      N/A     N/A
Average monthly
revenue per
  line (12)...........(pound)58.92(13) (pound)54.50(pound)43.62(pound)75.39(13)(pound)71.95(pound)71.29     N/A      N/A     N/A
Average churn rate
per line .............   12.4%(14)     14.5%(6)  15.0%(6)    25.0%(14)   24.8%(6) 23.1%(6)     N/A      N/A     N/A

</TABLE>
                                       4
<PAGE>
Notes:

"N/A" means not applicable.

(1)   Information with respect to Affiliated Franchises reflects the Company's
      equity interest therein.

(2)   Cable television basic penetration rate at a specified date represents (i)
      the total number of cable television basic customers at such date, divided
      by (ii) the total number of homes passed and marketed for cable television
      at such date.

(3)   Average monthly revenue per customer for each period represents (i)
      one-twelfth of the total cable television revenue for such period, divided
      by (ii) the average number of basic cable television customers in such
      period.

(4)   If the Merger had been completed on January 1, 1995, the average monthly
      revenue per subscriber would have been (pound)21.11 in 1995.

(5)   Average cable television churn rate for the period represents (i) the
      total number of cable television customers who terminated basic service or
      whose service was terminated by the Company during such period, divided by
      (ii) the average number of basic cable television customers in such
      period. If the Merger had been completed on January 1, 1995, the average
      cable television churn rate for the Owned and Operated Franchised would
      have been 44.5% in 1995.

(6)   Prior to 1996, the calculation of churn included those customers who moved
      homes and reconnected elsewhere in one of the Owned and Operated or
      Affiliated Franchises and consequently overstated customer dissatisfaction
      with the service provided. From 1996, the Company revised the basis on
      which "churn" is calculated to exclude those customers who moved their
      cable service from one premises to another within one of the Owned and
      Operated Franchises. Average churn rate for 1996 and 1997 represents (i)
      the total number of customers who voluntarily or involuntarily terminated
      service during such period, divided by (ii) the average number of
      customers in such period.

(7)   Residential telephony penetration rate at a specified date represents (i)
      the total number of residential cable telephony customers at such date,
      divided by (ii) the total number of homes passed and marketed for
      residential cable telephony at such date.

(8)   Average monthly revenue per residential line for each period represents
      (i) one-twelfth of the total residential cable telephony revenue for such
      period, divided by (ii) the average number of residential cable telephony
      lines in such period.

(9)   If the Merger had been completed on January 1, 1995, the average monthly
      revenue per line would have been (pound)20.69 in 1995.

(10)  Average residential telephony churn rate per line for the period
      represents (i) the total number of residential cable telephony lines
      terminated by customers or the Company during such period, divided by (ii)
      the average number of residential cable telephony lines in such period. If
      the Merger had been completed on July 1, 1995, the average residential


                                       5
<PAGE>
      telephony churn rate per line for the Owned and Operated Franchises would
      have been 21.8% in 1995.

(11)  Average number of business lines per customer at a specified date
      represents (i) the number of business cable telephony lines at such date,
      divided by (ii) the number of business cable telephony customers at such
      date.

(12)  Average monthly revenue per business line for each period represents (i)
      one-twelfth of the total business cable telephony revenue for such period,
      divided by (ii) the average number of business cable telephony lines in
      such period.

(13)  If the Merger had been completed on December 1, 1995, the average monthly
      revenue per line would have been (pound)59.39 in 1995.

(14)  Average business telephony churn rate per line for each period represents
      (i) the total number of business cable telephony lines terminated by
      customers or the Company during such period, divided by (ii) the average
      number of business cable telephony lines in such period. If the Merger had
      been completed on January 1, 1995, the average churn rate per line for the
      Owned and Operated Franchises would have been 13.1% in 1995.

RECENT DEVELOPMENTS

         The Owned and Operated Franchises and Affiliated Franchises now include
more than 25.7% of the U.K. homes in areas covered by cable licenses. One of
every three homes passed by the networks of the Owned and Operated Franchises
subscribe for one or more of the Company's services and more than 50% of the
Company's customer's subscribe for both cable television and cable telephony
services.

         Over the past few years, the Company has devoted substantial resources
to rapidly constructing its network in accordance with licence construction
milestones, while also actively developing and marketing various cable
telephony, television and Internet products and servicing its customers. In the
second quarter of 1997, with the Company's network approximately 69.8% complete,
the Company decided to significantly reduce the pace of its network construction
and increase its focus on developing and marketing attractive product offerings
and enhancing customer service.

         The Company has reduced the pace of its network construction from
passing an average of approximately 35,000 new premises per month in 1997 to
passing approximately 5,000 new premises per month in 1998. In addition, to
improve operating and management efficiencies, during 1997 the Company
streamlined its franchise operations by consolidating the management of its
franchises into four regional franchise areas, rather than the previous seven.
In connection with the consolidation of franchise management and other
initiatives to improve operating efficiencies, in the second half of 1997 the
Company announced and implemented a 25% reduction in the size of its work force.
The reduction in the pace of network construction is expected to significantly
reduce the Company's capital expenditure and the reduction of the work force and
the introduction of various operating efficiencies are expected to result in
significant on-going operating cost reductions.

         During 1997 the Company also implemented various initiatives to
strengthen its product offering and enhance its customer services. For example,


                                       6
<PAGE>
the Company trialed a further development of its Teleplus combined cable
television and telephony package, offering customers a "mini basic" package with
smaller number of channels, telephone line rental, free local calling within the
Company's Regional Franchise Areas at certain times and access to premium
television channels for a cost lower than that of the Company's traditional
basic package. Based on the success of these trials, in early 1998 the Company
introduced a variety of new combination packages (including the "mini basic"
package), marketed as Millennium, into all of its franchises.

In March 1997 the Company entered into a consortium with other U.K. cable
operators to provide a pay-per-view movie service for their cable television
subscribers, marketed as "Front Row". The joint venture has entered into
contracts with Columbia Tristar, Warner Brothers and Buena Vista International
and additional contracts are under negotiation. The Company expects the Front
Row service to be available in all of its franchises starting in the second
quarter of 1998 at a cost of approximately (pound)3 per movie. All of the
Company's cable television customers will have access to the Front Row service,
with most being able to order programs directly from their television remote
controls.

         As part of its initiative to improve customer service and provide
improved information to management about the Company's customers that can be
used to develop new product offerings to meet customer needs and more
effectively market its services, the Company has committed to invest
approximately (pound)30 million for a comprehensive new customer management
system throughout the Company. Parts of the system were completed in 1997 system
is expected to be substantially complete by the end of 1998.

         In 1997, the number of Company customers increased by more than 22.8%,
from 790,349 at December 31, 1996 to 970,173 at December 31, 1997, and during
the year the number of cable television customers increased by 14.7%, the
number of residential telephony lines increased by 33.4% and the number of
business telephone lines increased by 48.9%. Residential telephony penetration
increased by 2.2% in 1997 to 29.7% but churn increased from 19.6% to 20% and
revenues from the Company's expanding business telephony service increased by
27% to (pound)43.8 million. Cable television penetration remained stable for
most of the year at 22.0% but declined from 22.6% in 1996. Cable television
churn increased slightly from 33.4% to 34%.

         The Company's revenues increased significantly in 1997 to (pound)386.5
million from (pound)290.3 million in 1996, reflecting primarily an increase in
customers resulting from the Company's continued network construction and
aggressive marketing efforts. In addition, the Company achieved positive EBITDA
(earnings before share of net losses of affiliates, interest, taxes,
depreciation and amortization) of (pound)49.6 million for the period ended
December 31, 1997.

         On February 5, 1998, NTL Incorporated ("NTL") and Comcast UK Cable
Partners Limited ("Comcast") announced a proposed merger of their U.K. cable
interests. Comcast's assets include a 50% interest in Cable London plc ("Cable
London") and a 27.5% interest in Birmingham Cable Corporation Limited
("Birmingham Cable"). The Company currently has a 50% and 27.5% interest in
Cable London and Birmingham Cable, respectively. Pursuant to existing
arrangements between Comcast and the Company, the Company has the right to
acquire Comcast's interest in both Cable London and Birmingham Cable as a result


                                       7
<PAGE>
of the proposed change of ownership of Comcast. The Company currently is
considering its options with respect to Cable London and Birmingham Cable.

         On March 29, 1998 the boards of the Company and General Cable plc
("General Cable") announced that merger discussions between their two companies
were at an advanced stage which may result in a recommended offer being made by
the Company for the outstanding ordinary shares of General Cable.

         General Utilities Holdings Limited ("GUHL"), a subsidiary of Compagnie
Generale des Eaux ("CGE"), has entered into an agreement with the Company on
March 29, 1998 whereby it has agreed that, if the Company announces a firm
intention to make an offer within prescribed terms on or before 3.00 p.m. on
April 15, 1998 (or such later time or date as shall be agreed), GUHL will
irrevocably accept such offer in respect of its entire holding of 146,785,916
General Cable ordinary shares (representing approximately 40 per cent of General
Cable's issued share capital). The prescribed terms referred to above include
the following:

         o        an offer of 1.243 new Ordinary Shares and 65 pence in cash for
                  every General Cable share and 0.622 new ADSs and the
                  equivalent in U.S. dollars of 325 pence in cash for each
                  General Cable ADS; and

         o        a reorganisation of the board of directors of the Company so
                  that it will initially consist of seven non-executive
                  directors (designated by U S WEST, TCI, Cox, SBC and CGE),
                  four executives (to include one executive member of the
                  General Cable board) and three independent non-executive
                  directors (to include a nomination from the board of General
                  Cable).

         The Company announced that it is intended that the cash component of
the offer would, if made, be provided by means of an issue of up to 259 million
new Ordinary Shares, to be underwritten by major shareholders of the Company at
92.5 pence per share. It is envisaged that arrangements will be made to enable
the Company's public shareholders to participate in this issue.

         The board of General Cable has indicated that it will recommend the
proposed offer if made. Likewise, U S WEST, TCI, SBC and Cox have indicated
their support for the proposed offer.

         There can be no assurance that these discussions will result in any
proposal being put to General Cable's shareholders, or if so put, would be
accepted. Any offer would be made only by means of formal offer documentation,
which in the United States would include a prospectus.

CABLE TELEVISION

   Overview

         The Company, through its predecessor companies, began offering cable
television in the U.K. in 1985. The Company derives its cable television
revenues from connection charges, monthly basic and premium service fees,


                                       8
<PAGE>
"pay-per-view" program fees, cable publications and advertising charges. As at
December 31, 1997 the Company had passed and marketed approximately 2,760,184 of
the 2,970,168 homes passed in the Company Owned and Operated Franchises and had
a cable television penetration rate of approximately 22.0%.

   Programming

         The Company currently offers more than 50 channels to its customers as
part of its basic service and 14 channels as part of its premium service
offering (including bonus channels provided in connection with the subscription
for certain premium channels). The Company obtains its programming from a
variety of sources, including BSkyB, terrestrial broadcasters and other
programming suppliers. The Company generally arranges its programming so that
the same programming appears on the same channel number in each of the Regional
Franchise Areas, thereby facilitating the use of the same marketing materials
(including monthly programming guides such as "The Cable Guide") across the
Regional Franchise Areas.

         Customers can choose to receive basic service programming alone or
together with premium programming. The following table sets out the basic and
premium service programming currently offered by the Company (most of which is
carried on dedicated channels and some of which is carried on shared channels):


<TABLE>
<CAPTION>
             PROGRAMMING                                 DESCRIPTION
             -----------                                 -----------
BASIC SERVICE
-------------
NEWS AND INFORMATION
<S>                                                     <C>
Arcade                                                   Local text advertisements
Bloomberg Information Television                         Business news
BBC News 24                                              24 hour news channel from the BBC
Cable 17                                                 Local information, lifestyle and news
Channel One                                              News and information for the London area
Channel One Avon                                         News and information for the Avon area
Channel One Liverpool                                    News and information for the Liverpool area
CNN International (1)                                    24-hour international news service
EBN(1)(2)                                                European business news
The Parliamentary Channel (1)(3a)                        Live coverage of Parliamentary proceedings
Sky News (2)(4)                                          24-hour U.K. news service
The Channel Guide                                        Summary of programming schedule

GENERAL INTEREST
BBC1                                                     Terrestrial television
BBC2                                                     Terrestrial television
Bravo (1)(2)                                             Cult films and television series
Challenge TV (1)(2)                                      Game shows
Channel 4                                                Terrestrial television

                                       9
<PAGE>
             PROGRAMMING                                 DESCRIPTION
             -----------                                 -----------

Channel 5                                                Terrestrial television
Eurosport                                                International sporting events
ITV                                                      Terrestrial television
Live TV (5)                                              Live entertainment and local programming
Liverpool Live                                           Live entertainment and local programming
Living (1)(2)                                            Lifestyle programming
Edinburgh Live                                           Live entertainment and local programming
NBC                                                      U.S. programming
QVC (2)                                                  Home shopping
Sci Fi Channel (2)                                       Science fiction programming
Carlton Food Network                                     Culinary programming
Carlton Select                                           Comedy and drama
Sky One (2)(4)                                           General entertainment
Sky Soap (2)(4)                                          Soap operas
Sky Travel (2)(4)                                        Travel programming
The Discovery Channel (1)(2)                             Documentary programming
Discovery Home and Leisure (1)(2)                        Lifestyle programming
Travel                                                   Travel programming
TNT (1)                                                  Classic films
UK Gold (1)(2)                                           Classic U.K. television programming
UK Style (1)                                             Lifestyle channel
UK Horizons (1)                                          Documentary programming
UK Arena (1)                                             Arts and drama
Granada Plus (2)                                         General entertainment and classic U.K. programming
Granada Men and Motoring (2)                             Automotive programming
Granada Good Life (2)                                    Leisure programming
The Paramount Comedy Channel (2)                         Comedy channel

CHILDREN
Nickelodeon (2)                                          Children's entertainment
The Cartoon Network (1)                                  Children's cartoons
Trouble/TCC (1)(2)                                       Teenage and children's programming
Rapture (3b)                                             Teenage and educational programming

INTERNATIONAL
Asianet                                                  Programming relating to the Asian subcontinent
Deutsche Welle                                           German language programming
RAI UNO                                                  Italian language programming
TVE International                                        Spanish language programming
TV5                                                      French language programming
CNE                                                      Chinese language programming

MUSIC
Country Music Television Europe (2)                      Country music videos
MTV (2)                                                  Music videos

                                       10
<PAGE>
             PROGRAMMING                                 DESCRIPTION
             -----------                                 -----------

Performance - The Arts Channel                           Classical music and opera
The Box                                                  Music videos selected by customer requests
The Landscape Channel                                    Classical music accompanying scenic videos
VH-1 (2)                                                 Music videos

PREMIUM SERVICE
GENERAL INTEREST
The Disney Channel (2)                                   Family and children's programming

SPORTS
Sky Sports (2)(4)                                        U.K. and international sports
Sky Sports 2 (2)(4)                                      U.K. and international sports
Sky Sports 3(2)(4)                                       U.K. and international sports
The Racing Channel                                       Live horse racing

MOVIES
HVC                                                      Adult action, adventure and horror films
Playboy Television (1)(2)                                Adult entertainment
Sky Movies (2)(4) *                                      24-hour feature films
Sky Movies Gold (2)(4) *                                 Classic films
Television X                                             Adult entertainment
The Adult Channel                                        Adult entertainment
The Movie Channel (2)(4)(6)                              24-hour feature films

</TABLE>

-------------------------
Notes:

(1)   TCI, U S WEST or Cox (or their affiliates) own interests in or manage the
      provider of this programming.

(2)   Programming distributed or marketed by British Sky Broadcasting Group or
      its affiliates ("BSkyB").

(3a)  The Company owns an interest of approximately 27% in the provider of this
      programming.

(3b)  The Company owns an interest of approximately 4% in the provider of this
      programming.

(4)   Programming acquired from BSkyB.

(5)   Live TV is provided by Live TV Ltd., whose ultimate owner is part of The
      Mirror Group plc, a leading U.K. newspaper publisher. Lord Borrie QC (a
      director of the Company) is a director of The Mirror Group plc. CPP-1, a
      joint venture of affiliates of TCI, U S WEST and SBC, together with three
      other U.S. companies with interests in U.K. cable operators, has a 10%
      interest in Live TV.

(6)   Now known as Sky Screen 1 and Sky Screen 2.


                                       11
<PAGE>
         The Company's basic service also includes a wide range of terrestrial
and satellite radio stations and, where available, NICAM stereo audio feeds for
television channels. In addition, the Company also offers multi-channel,
digital, audio-only services to business customers (including one service in
which an affiliate of TCI has a 49% interest).

         As part of its strategy to offer customers a broader range of
entertainment programs, the Company intends to introduce a "pay-per-view"
analogue movie service, to be marketed as "Front Row". This service is to be
provided by a cable industry consortium ("Front Row") owned by Telewest (40%),
CableTel Programming Inc (40%), General Cable (13%) and Diamond Cable
Communications Ltd. (7%). The consortium has entered into contracts with
Columbia Tristar, Warner Brothers and Buena Vista International which entitle
the consortium members to distribute movies on a pay-per-view basis to their
customers. The pay-per-view window is generally six months in advance of the
time movies are released for pay television premium channels. This service is
expected to launch in the Company's franchises in the second quarter of 1998.
The Company intends to carry other "pay-per-view" services as and when they
become available.

   Source of Programming. The Company obtains most of its programming from
suppliers pursuant to arrangements that run for periods from six months to ten
years. The arrangements generally provide for payments by the Company based on
the number of its customers subscribing to that particular channel. In many
cases, the per subscriber charges for the Company decrease as the number of its
customers subscribing to that channel increases. The Company and the Affiliated
Companies contract together for some program channels, which increases the
aggregate number of contract customers and thereby reduces the cost per
subscriber. Under the terms of its PDSLs (as defined herein), the Company is
also required to provide its customers with certain specified terrestrial
television services without charge.

         The Company obtains a significant amount of its programming from BSkyB,
a leading supplier of cable programming in the U.K. and the exclusive supplier
of certain programming. Its programming generally is popular in the U.K. and is
important in terms of attracting and retaining cable television customers. In
April 1995, Old Telewest entered into a seven-year contract with BSkyB (the
"BSkyB Contract") that will expire in April 2002. Pursuant to the terms of the
BSkyB Contract, BSkyB provides the Old Telewest franchises with 10 BSkyB
channels. The former SBCC franchises have, since February 16, 1996, been
provided with BSkyB programming pursuant to an industry rate card, which sets
out the terms and conditions for the supply of programming by BSkyB to those
operators in the U.K. cable industry who do not have separate agreements with
BSkyB. BSkyB also offers this programming (together with additional programming)
to its DTH satellite customers, in competition with the Company and all other
cable operators throughout the U.K. The BSkyB Contract grants to Old Telewest a
non-exclusive right and license to receive BSkyB's channels and "pay-per-view"
services (which, for the purposes of the BSkyB Contract, will include (when
available in the U.K.) NVOD but not video-on-demand) and, subject to available
capacity and certain other conditions, to distribute the channels to
residential, commercial and public premises customers and distribute the
"pay-per-view" services to residential customers. The agreement provides for the
parties to negotiate in good faith for the provision of "pay-per-view" services
for commercial customers, subject to the acquisition of programming for such
services.

                                       12
<PAGE>
         Under the BSkyB Contract, and in respect of the industry rate card for
the former SBCC franchise areas, customer fees payable to BSkyB for each
customer are different for residential, commercial and public premises customers
and vary according to the channels subscribed for and, in the case of commercial
customers, according to the number of rooms for which the service is provided.
Fee arrangements for "pay-per-view" programs are negotiated separately for each
event. The monthly fees for basic channels under the BSkyB Contract and the
industry rate card are subject to annual increases which are equal to the
greater of 7% or the amount of the annual change in the U.K. Retail Price Index
under the contract and the industry rate card. Customer fees for premium
channels are linked to BSkyB's DTH satellite subscription prices. Old Telewest
has the option to bring the former SBCC franchise areas into the contract
subject to the satisfaction of certain conditions. The aggregate amount paid by
the Company to BSkyB with respect to the year ended December 31, 1997 was
(pound)67.5 million.

         In July 1995, the Office of Fair Trading ("OFT") declared that the
BSkyB Contract was registerable under the Restrictive Trade Practices Act of
1976 and that certain of the provisions in the agreement were significantly
anti-competitive. As a result, BSkyB submitted proposals to the OFT amending the
relevant provisions, and the Company, in principle, accepted such proposals. The
OFT has opined that the proposals address its concerns on the anti-competitive
provisions. However, the European Commission has indicated that certain of the
remaining provisions may contravene European competition law. If the parties are
unable to persuade the European Commission to the contrary, and the parties do
not modify the provisions in issue, the European Commission may initiate formal
proceedings. If at the end of those formal proceedings the European Commission
maintains its original position, it may issue a decision declaring that such
provisions infringe European competition law and are therefore void. The Company
does not anticipate that any such decision would impose any other sanction.

         The Company also obtains a significant amount of its programming 13
programming channels) from providers which Flextech plc ("Flextech"), a publicly
quoted U.K. company (approximately 36.8% of which is owned by an affiliate of
TCI and approximately 6.7% of which is owned by an affiliate of U S WEST and
approximately 13.2% of which is owned by Cox), and other affiliates of TCI
either own interests in or manage. In addition, affiliates of U S WEST, TCI and
SBC are partners in CPP-1, a joint venture with three other U.S. cable operators
which has a 10% interest in Live TV. Live TV is carried by the Company's
network. The Company believes that programming obtained from all the affiliated
programming suppliers is obtained on terms no less favorable than those
available to unrelated third parties.


   Advertising

         In the twelve months ended December 31, 1996 and 1997, the Company's
revenue from advertising was approximately (pound)1,326,000 and
(pound)1,729,000, respectively. The Company has allocated one channel on its
network for local advertising (typically text and still graphics). In addition,
with the programming provided to the Company by a number of suppliers (not
including programming supplied by BSkyB or terrestrial broadcasters, which
together currently account for the vast majority of television viewing time by
cable customers in the U.K.), the Company typically is allocated time (usually
one or two minutes per channel per hour) during which the Company can insert


                                       13
<PAGE>
advertising. The Company has entered into a contract with a subsidiary of The
Mirror Group plc which acts as the Company's agent for the sale of such
advertising time.

CABLE TELEPHONY

   Overview

         The Company, through its predecessor companies, began offering cable
telephony in the U.K. in 1992. The Company derives its cable telephony revenues
from connection charges, monthly line rental charges, call charges, residential
service charges (e.g., call waiting), business service charges (e.g., private
business line and centrex) and interconnection fees payable to the Company by
other operators. As at December 31, 1997, the Company had passed and marketed
approximately 2,725,154 homes for cable telephony, had 836,168 residential lines
for 810,358 customers (representing a residential cable telephony penetration
rate of approximately 29.7%) and had installed an aggregate of 100,989 business
lines for 25,475 customers.

   Services

         The Company seeks to offer residential and business customers reliable
and high-quality telephony services over its broadband network at competitive
prices.

         Residential Services. The Company offers local, long distance and
international cable telephony service as well as a broad range of additional
services to its residential customers. The Company's additional services
include: call waiting, call barring (prevents unauthorized outgoing calls), call
diversion (call forwarding), three-way calling and fully itemized monthly
billing. In addition, the Company is currently introducing voice mail and caller
identification throughout its Regional Franchise Areas. The Company's network
architecture provides a flexible platform that will enable it to offer a wide
range of other telephony services as they become available in the future.

         Business Services. The Company markets its cable telephony services to
selected businesses and institutions within its franchise areas. The Company
believes that these targeted businesses and institutions represent attractive
potential customers because (a) they have a high volume of calls, many of which
are high-margin local calls that can be switched and delivered entirely by the
Company, (b) the Company generally can serve these needs with its existing
technology and network and without investing in costly research and development
of new networks and products, (c) the persons making the decisions with respect
to selecting telephony service are usually located in the Company's Regional
Franchise Areas and (d) by targeting specific segments, the Company directs
significant advice and support to a specific, targeted customer base. As of
December 31, 1997, the Company served approximately 25,000 business customers
and had installed 101,000 business lines.

         The Company offers a range of special business services that it
believes are particularly attractive to small- and medium-sized businesses and
institutions. For example, the Company provides high-capacity private lines to
carry voice and data between two or more locations within a Regional Franchise
Area (e.g., between two branch offices) and now provides high-capacity private
lines to connect voice and data between locations in different Regional


                                       14
<PAGE>
Franchise Areas and other areas of the U.K. through the Interfranchise Network
to the extent completed. This ability will increase substantially when the
network is fully operational. See "New Initiatives -- The Interfranchise
Network". In addition, the Company offers a "CENTREX" service, which provides
the switching of internal and outside calls for multi-line businesses from
outside the customer's premises, thus saving the customer the cost of purchasing
or leasing its own switching equipment. The Company currently also offers ISDN
service to its business customers in certain Regional Franchise Areas, which
permits the high speed, simultaneous transmission of voice, data and video over
the telephone line. The Company currently anticipates rolling-out the ISDN
service over time to the other Regional Franchise Areas. See "On-Line Service --
Internet Access."

         With the introduction of "number portability" in the U.K. in September
1996, the Company began offering BT customers the opportunity to transfer their
service to the Company without changing their existing telephone number. As of
December 31, 1997, the Company had implemented number portability in all
Regional Franchise Areas for residential and business customers of all service
providers (as required by the Company's Telecommunications Licenses).

         Internet Access. In 1996, the Company began offering customers Internet
access through its own Internet service provider, Cable Internet Limited. This
access had been extended to all Regional Franchise Areas by the end of 1997. The
Company currently provides three Internet access services: dial-up services
primarily for residential customers, leased lines for business customers and
network access for wholesale customers. The Company also intends to offer higher
speed Internet access to business customers using ISDN lines. The Company has
completed a technical trial of high speed Internet access using cable modems and
intends to develop this opportunity further in 1998 as international standards
develop.

         Digital Services. The Company intends to introduce digital technology
in the U.K. in one franchise area in the second half of 1998. Digital technology
allows operators to provide more channels (through digital compression of
analogue signals), and higher quality pictures and sounds. Through the
introduction of digital technology, the Company expects to be able to offer
customers up to 240 programming channels (as compared to the 52 channels
currently offered by the Company through its analogue service), which will
enable the Company to provide services such as NVOD and digital pay per view. It
will also enable the Company to use its broadband network to provide additional
services such as cable television Internet access, electronic mail, home
shopping and banking. The Company believes that digital technology will enable
it to offer customers substantial additional choice and flexibility in selecting
the services desired.

         The Company's digital head-end will be built at its Knowsley franchise,
where the programming and services will be received by satellite, terrestrial
broadcast or videotape and converted into a digital signal for transmission over
the Company's broadband franchise networks and into customer homes and
businesses. The Interfranchise Network will enable the Company to use a single
digital head-end to transmit the digital signal to remote units in each of the
Company's franchises, thereby avoiding the need to install a separate digital
head-end in each franchise and maintain personnel at each such head-end. See


                                       15
<PAGE>
"The Interfranchise Network." The Company intends to continue to offer customers
analogue services, as it rolls out the digital services.

  The Interfranchise Network

         In 1996 the Company commenced construction of the Interfranchise
Network, which will link the 28 Owned and Operated Franchises and the seven
Affiliated Franchises. The Interfranchise Network is on schedule to be completed
by the middle of 1998.

         The Company anticipates that construction of the Interfranchise Network
will increase telephony margins by reducing the payment of interconnection fees
to national carriers for long distance calls between locations in different
franchise areas. The Company expects that construction of the Interfranchise
Network also will create new business telephony revenue opportunities by
enabling the Company to create private networks for businesses with multiple
sites located throughout the various Company and Affiliate Company franchise
areas.

         When complete, the Interfranchise Network is expected to include
approximately 2,250km of high capacity multi-fibre optic cable, as well as
various high capacity electronics. The Company is seeking to build the network
in a cost effective manner, using a combination of parts of the existing
networks of the Company and the Affiliated Companies, parts newly built by the
Company or built and shared with other service providers and parts consisting of
leased lines (with electronics in place) and leased fibre (without electronics
in place).

PRICING

         The Company offers a variety of pricing options, including single
service pricing and pricing for combinations of the Company's services.

         In 1996, the Company began offering combined pricing packages under the
brand name "Teleplus". In 1997, the Company trialed a further development of
Teleplus, offering customers a "mini basic" package with smaller number of
channels, telephone line rental, free local calling within the Company's
Regional Franchise Areas at certain times and access to premium television
channels, for a lower cost than that of the Company's traditional basic package.
Based on the success of these trials, in early 1998 the Company introduced a
variety of new packages, marketed as "Millennium", into all of its franchises.
All of the packages provide access to the Company's Front Row pay-per-view movie
service. The Millenium packages were initially principally targetted at former
customers and homes which have never subscribed for a service from the Company.

         Cable TV

         The Company currently charges either (pound)17.99 (if the customer
elects the direct debit payment option) or (pound)18.99 per month for its
standard basic cable television only service (approximately 50 channels and one
converter box which provides cable service to one television). Premium channels
range in price from (pound)4.00 per month per channel to (pound)9.00 per month
per channel, depending on the channels selected. Customers receive discounts for
the purchase of multiple premium channels. An additional monthly fee of
(pound)4.49 is charged for each additional converter box. All converter boxes
remain the property of the Company and a refundable (pound)20.00 deposit may be
charged for each box. Typically, the Company charges a one-time cable television
connection fee of (pound)30.00, although the Company often offers reduced or no
connection charges for cable television when service is first provided in an
area or an area is remarketed. All prices indicated above include U.K. value
added tax ("VAT").


                                       16
<PAGE>
   Cable Telephony

         The Company currently seeks to provide its telephony customers with
savings on the cost of calls as compared to BT, its principal competitor. The
Company intends to maintain such savings, although there can be no assurance
that the Company will be able to continue to provide its residential customers
with lower call prices than BT without adverse effects on its profitability,
particularly in light of continued regulatory downward pressure on BT's charges.
See "Certain Regulatory Matters -- Cable Telephony -- Price Regulation".

         For residential telephony customers, the Company offers a three-tier
price structure for line charges (which is in addition to the call charges
discussed above). The monthly charge for customers subscribing for the telephony
service only is (pound)7.89 per line, providing a saving of (pound)1.00 per
month over BT's equivalent charge. The monthly charges for special services such
as call waiting or call diversion vary between (pound)1.00 and (pound)2.00 per
service. Initial installation charges are (pound)30.00 as compared to BT's
equivalENT charge of (pound)116.33. However, because most telephony customers
already have an existing BT line, the Company's installation fees are often
discounted to encourage customers to switch service providers.

         The Company's line charges for business customers (which are in
addition to the call charges discussed above) are also competitive with those of
BT and Mercury Communications Limited ("Mercury") and other suppliers. The
Company's monthly line rental charge for a business customer as at December 31,
1997 varies by service from (pound)10.99 and its line installation charge varies
according to the number of lines installed (from (pound)50 for the first line to
(pound)30 for each subsequent line). All prices indicated above exclude VAT.

         As a consequence of owning its own switching equipment (as discussed
below), the Company can provide more pricing and feature options to its
customers. For example, the Company currently offers business telephony
customers various discount plans based on usage and other factors.

   Millennium Package Pricing

         In order to encourage customers to subscribe for both television and
telephony service and based on the successful trials of the mini basic package
in two franchises in 1997, in early 1998 the Company introduced the combined
cable television and telephony Millennium packages into all of its franchises.
The charge for the Millennium packages vary between (pound)12.99 and
(pound)21.99 per month, depending on the package selected. The packages provide
different combinations of basic telephony and television service together with
free local calls to other customers within the Company's Regional Franchise
Areas at certain times and the option to acquire one or more premium channels
for an additional (pound)8.00 to (pound)20.00 (depending upon the number of
premium channels selected) and access to the Company's Front Row pay-per-view
movie service. The (pound)12.99 Millennium package offers customers a low priced
entry point for a mini basic service of 14 channels (reduced from the
approximately 50 channels historically offered by the Company as part of its
basic service), telephone line rental, free local calls to other customers
within the Company's Regional Franchise Areas at certain times, plus access to
premium channels and Front Row. The installation charge for customers
subscribing for both cable television and telephony services at the same time is
(pound)30.00. Customer benefits from the Millennium packages include more
flexibility, choice and pricing as well as the convenience of dealing with a
single provider for two services. The Company believes that the


                                       17
<PAGE>
Millennium product provides it with an effective way to cross-promote its
services and retain customers.

SALES AND MARKETING

         The Director of Sales and Marketing leads the Company's residential
sales and marketing activities with a staff of sales and marketing
representatives in the field and in the corporate offices handling advertising,
promotion and related matters. In addition, there is a Head of Residential Sales
and Marketing at each Regional Franchise Area who directs the sales and
marketing for that area. A Managing Director of Business Services leads the
Company's business service operations, sales and marketing activities and is
supported by Directors of Business Services in the Regional Franchise Areas. The
corporate marketing staff and the field marketing directors and their staff meet
on a frequent basis to review sales and marketing results at each of the
franchises and to exchange ideas with respect to various sales and marketing
practices. From time to time, the Company also discusses sales and marketing
practices with the Affiliated Companies.

         As the Company's business develops, the Company is focusing less on
door-to-door sales and more on integrated marketing strategies, which combine
direct sales, telemarketing, direct mail and retail. As part of this approach,
several campaigns were conducted during the year, spreading awareness of
"Telewest Communications" throughout the franchise areas. In communities where
the network is most built out, these integrated strategies are designed to
emphasize the Company's core strengths of value, choice and service.

         Due to the specialized nature of the Company's business telephony
products and the competitive nature of the market, the Company has separate
sales and marketing groups to market, service and support business customers.

         To maximize the productivity of its sales staff, the Company pays field
representatives on either a salary plus commission or a straight commission
basis. The commissions generally are based on various factors, including
penetration level and revenue from services sold. In order to minimize customer
churn, a portion of the commission may be withheld until a customer retains
service for a given period (typically four months).

CUSTOMER SERVICE

         Customer service is primarily handled locally by each of the Regional
Franchise Areas. Approximately 600 customer service representatives report to
the Managing Director and Head of Customer Operations at each of the Regional
Franchise Areas.

         The Company has introduced an eight week customer care training course
for telephone based customer service representatives. This program is now being
expanded for all sales staff, installers and repair technicians. The customer
service department is organized so that customers need call only one number to
reach the appropriate service provider to address their cable television and
cable telephone service, billing and repair questions. The Company seeks to
provide customers with prompt telephony and television service repair.
Generally, repair service is done by the Company's own employees and service
installations and terminations are done by a combination of its own employees
and independent contractors.

                                       18
<PAGE>
         One important measure of customer satisfaction is the service churn
rate among customers. A customer may terminate service by prior written notice
to the Company. The Company may terminate a customer's service when the customer
becomes delinquent in payment. The Company's experience to date is that the
churn rate is highest shortly after a customer first activates a service. The
Company's churn rates for basic cable television service increased from 33.4% in
1996 to 34.0% in 1997 and for residential telephony line service from 19.6% in
1996 to 20.0% in 1997. The Company believes that the increase in cable
television churn is primarily due to the significant increase in the pricing of
premium channels, resulting from an increase in their wholesale cost of
programming, which was implemented in November 1997, coupled with a temporary
decline in customer service standards as a result of the restructuring and
redundancy programme implemented in the fourth quarter of 1997. The Company
believes that the increase in the residential telephony churn is primarily due
to the temporary decline in customer service and increased competition. The
Company also believes that churn rates for business telephony line service
increased from 14.5% in 1996 to 15.0% in 1997 primarily due to the Company's
efforts to market its service to a broader range of business customers.

         The Company seeks to minimize customer churn by providing customers
with a combination of attractive, competitively-priced programming and telephone
services and strong customer service. The Company also is introducing a new
customer management system to improve customer service and implementing strict
credit procedures to reduce terminations by the Company due to delinquent
payments. The Company regularly surveys its customers to determine their
satisfaction with the service provided and attempts to improve such service
based on the explanations offered by customers who cancel their service. In
order to reduce terminations by customers and improve debt collection, the
Company encourages customers to pay bills by direct debit by offering lower
prices to customers who pay with direct debit.

  NETWORKS

  Construction

         Broadband Network. The Company expects that the broadband cable network
in the Owned and Operated Franchises will cover approximately 41,000 kilometers
and pass approximately 4.4 million homes when substantially completed. As at
December 31, 1997, the Company had completed construction of the network passing
approximately 75.0% of the homes in the Owned and Operated Franchises. The
Company anticipates that the remaining construction will be substantially
completed by the end of 2003. Construction of the broadband cable network has
commenced at all of the 28 Owned and Operated Franchises. The Company plans the
construction in the Owned and Operated Franchises based on various factors,
including construction milestone requirements (as discussed below), network
design considerations (e.g., location of head-end), franchise demographics and
facilitation of interconnection with other Owned and Operated Franchises.

         Each Telecommunications License (as defined in "Certain Regulatory
Matters") prescribes build obligations ("milestones") that require the Company
to construct its network to pass a specified number of premises (which are
defined for the purposes of the Telecommunications Licenses as homes or
businesses passed for cable television service) by prescribed dates. Although in
the past the Company from time to time has not met certain milestones, it has

                                       19
<PAGE>
generally sought and received appropriate milestone modifications from the
Director General of OFTEL.

         The following table sets out the aggregate future milestones for each
of the Company's seven franchise areas. The actual milestones that the Company
is required to meet are specified individually for each of the franchises within
the Regional Franchise Areas. Consequently, the Company could meet the aggregate
milestones for a given franchise area, but still fail to meet one or more
individual franchise milestones and therefore subject a Telecommunications
License to the risk of revocation or termination.


<TABLE>
<CAPTION>
                  LONDON       SOUTH                    AVON AND                   NORTH        NORTH
      AS OF        SOUTH        EAST       MIDLANDS    COTSWOLDS     SCOTLAND       EAST         WEST
 DECEMBER 31,(1)MILESTONES   MILESTONES   MILESTONES   MILESTONES   MILESTONES   MILESTONES   MILESTONES
 -------------- ----------   ----------   ----------   ----------   ----------   ----------   ----------
<S>             <C>          <C>         <C>           <C>          <C>          <C>          <C>
     1998         378,000     379,000      614,000      445,000      549,000      294,000      654,000
     1999            -        424,000      614,000      456,000      549,000      340,000      654,000
     2000            -           -            -         470,000      554,000         -         654,000
     2001            -           -            -         484,000      562,000         -         695,000
     2002            -           -            -         498,000      574,000         -         740,000
     2003            -           -            -            -         584,000         -         778,000
     2004            -           -            -            -            -            -         792,000

</TABLE>

----------------------------

         (1)      All milestone information is rounded to the nearest thousand.

         In late 1997 the Company applied for, and the ITC granted, amendments
to the construction milestones in the LDSLs for two franchise areas to delay the
required construction. The Company currently is in the final stage of
discussions with OFTEL regarding amendments to the construction milestones in
the Telecommunications Licenses for four franchise areas. OFTEL has agreed to
the Company's proposed amendments and is proceeding with the required public
consultation with respect to the amendments. The Company expects final action on
the proposed amendments by the middle of 1998 and believes that the amendments
will be granted in view of the substantial network construction completed by the
Company to date and the compliance of the proposed amendments with the general
OFTEL amendment criteria. However, there can be no assurance that any amendments
will be granted or granted within the expected time period.

         If the amendments are granted as requested, the Company will complete
construction passing the same total number of premises as provided under the
Telecommunication Licenses as currently in effect (3,630,000 premises) by the
same termination date currently provided in such licenses (December 31, 2004),
but with a different construction schedule. Under the amended milestones,
scheduled construction in 1998 would be reduced to approximately 5,000 premises
per month from approximately 21,000 premises under the current milestones and
construction in 1999 would also be lower than currently scheduled. Construction
levels under the amended licenses in the later years would be higher than those
under the current milestones.

         The following table sets out the aggregate future milestones for each
of the three Affiliated Companies. The actual milestones that the Affiliated
Companies are required to meet are specified individually for each of the seven
franchises within the Affiliated Franchises. Consequently, the Affiliated
Companies could meet the aggregate milestones for a given Affiliated Franchise,


                                       20
<PAGE>
but still fail to meet one or more individual franchise milestones and therefore
subject a Telecommunications License to the risk of revocation or termination.

<TABLE>
<CAPTION>
                                                         CABLE                CABLE
         MILESTONE              BIRMINGHAM              LONDON             CORPORATION
           DATE                MILESTONE(1)             MILESTONE(1)        MILESTONE(1)
           ----                ------------             ------------        ------------
<S>                            <C>                     <C>                 <C>
December 31, 1997                 275,000               257,000              264,000
December 31, 1998                 325,000               287,000              264,000
January 31, 1999                  400,000               409,000              264,000
December 31, 1999                 450,000                  -                    -

</TABLE>

----------------------

         (1)       The milestones for the Affiliated Companies are specified in
                   the Telecommunications Licenses for 12-month periods ending
                   on the last day of various months. All milestones are
                   presented on an annualized pro forma basis for 12-month
                   periods ending on December 31. All milestone information is
                   rounded to the nearest thousand.

         Although the Company believes certain of the Affiliated Companies may
be seeking amendments to the construction milestones in their Telecommunications
Licenses, the Company does not have details of any such amendments and cannot
determine the likelihood that any such amendments will be granted or the timing
thereof.

         Interfranchise Network. For information regarding the Company's
interfranchise network, see "Cable Telephony -- The Interfranchise Network".

Network Architecture

         In the U.K., cable operators generally are required to install cable
underground. This significantly increases the cost of construction as compared
with above-ground installations and makes it more time-consuming, costly and
disruptive to customers and others for the Company to replace cable or
underground components in the cable network in order to upgrade and expand
service in the future. As a result, the Company designs its distribution network
(e.g., the fibre-optic cable and underground components) to permit network
upgrades and expansions to be accomplished whenever possible by installing or
replacing equipment at the head-end and/or the customers' premises and without
undertaking significant construction with respect to its existing underground
network and incurring substantial additional construction costs. The Company is
currently upgrading the network to carry digital services and is doing so almost
entirely through the addition of equipment at the head-ends and at customer
premises and without the need for significant network construction costs.

         The network architecture of the Company's individual franchises varies
generally depending on when the construction was started. Initially, cable
systems in the U.K. were built to provide only cable television service.
Following the review undertaken by the U.K. government (when the U.K. government
changed the duopoly policy to permit cable operators to operate their networks
to provide cable telephony services and call switching as principals, rather
than only as agents for and under agreements with BT or Mercury (the "Duopoly
Review")) telephony service was often added to existing networks and plans for

                                       21
<PAGE>
future networks were modified to carry both television and telephony services.
In some business areas the Company has built cable telephony only networks. As a
result, there are three types of networks in use or under construction by the
Company: cable television only; cable telephony only; and cable television with
a cable telephony overlay.

         Currently, cable television only service is provided to residential
customers in part of the Scotland Regional Franchise Area franchise. The overlay
network is used in all of the Company's other franchises under construction or
previously installed and is being used to upgrade the parts of the Scotland
Regional Franchise Area that currently provides only cable television service.
In some predominantly commercial areas in the Company's franchises, only cable
telephony services are provided.

   Switching

         Digital telephony switches have been installed in all of the Company's
Regional Franchise Areas. The switches enable the Company to increase its
profitability and operating flexibility by (a) eliminating the need to pay third
parties for switching calls between its customers within a Regional Franchise
Area and reducing the cost of switching calls to other operators outside of a
Regional Franchise Area, (b) receiving revenues from other telephony operators
who use the Company's switches to complete calls to the Company's customers and
(c) eliminating the need to rely upon third parties for the administration of
new customer connections. In addition to the installation of its own switches,
the Company (together with certain other cable operators) has established a
central network service center in Woking that provides 24-hour-a-day centralized
switch engineering, interconnect access administration and related support
services. The costs of the service center are shared by the participating cable
operators. The Company believes that this centralized system is a cost-effective
approach to managing cable telephony networks with multiple switches.

         By operating its own switches, the Company is able to gather
information about customer calling patterns and use this information in its
marketing program and to structure customized call pricing plans and discount
programs. The availability of this information also enables the Company to
reduce fraudulent activity by identifying unusual or excessive call activity at
an early stage.

         The Company is building a broadband Interfranchise Network to carry
voice, data and video traffic between the franchises which is expected to be
completed in mid-1998. See "Cable Telephony -- Interfranchise Network."

         In December 1996, the Company was awarded an international facilities
license under the Telecommunications Act 1984 by the Secretary of State for
Trade and Industry. This has enabled the Company to establish direct
relationships with international PTOs and further reduce the cost of
international carriage. In December 1996, the Company began connecting its
Regional Franchise Areas to Telstra (the Australian PTO) to carry a portion of
the Company's international telephony traffic. See "Certain Regulatory Matters
-- Interconnection Arrangements."

                                       22
<PAGE>
Sources of Supply

         The Company obtains services and equipment for the construction and
operation of its cable systems from numerous independent suppliers. These
services, including civil engineering services, and equipment generally have
been purchased under short-term contracts (e.g., one year or less), although the
contracts for the Company's interconnect services are longer. As a result of its
increased operational size and purchasing needs, the Company seeks to use its
increased buying power to obtain more favorable contract terms covering longer
periods (e.g., one to three years).

         The Company believes that it can purchase all of the services and
equipment it needs to operate its business from more than one source. However,
if one of the suppliers of a product which involves significant lead time for
production and delivery were to be unwilling or unable to supply the Company,
the Company could suffer disruptions in the operation of its business, which
could have an adverse effect on the Company.

         The Company's principal suppliers include the following: McNicholas
Construction Company Limited, M&N Contractors Limited, AMEC Utilities Limited,
Moywest Limited, Ashbourne Communications U.K. Ltd, JP Fitzpatrick, J Murphy and
Sons Limited, Kelly Communications (civils and activations contractors); Nortel
Ltd and GPT Telecommunication U.K. Limited (telephony switching equipment);
General Instruments Inc. and Scientific-Atlanta Broadbank Europe Inc.
(addressable converter boxes); Antec International and Tratec U.K. Ltd (cable TV
distribution equipment); Nokia Telecommunications and DSC Technics Limited
(telephony transmission equipment); Times Fiber Communications Inc. and
Commscope (coaxial cable); GPT Telephone Cables (fibre-optic and copper cable);
and Eltek Limited and Alpha Technologies (power supply equipment).

         The Company owns all of its cable network equipment other than its
Nortel switches. The Company leases these telephony switches under finance
leases from Nortel and the Royal Bank of Scotland.

         The Company has experienced no significant difficulty in obtaining
timely deliveries of services and equipment within the past 12 months and
believes it maintains adequate inventories of significant equipment. In order to
reduce warehousing expenses, maximize inventory control and minimize the
possibility that the Company will not have the required inventory to proceed
with construction in a timely manner, the Company has centralized warehouse
operations through a third-party supplier of warehousing services.

FRANCHISES

   Regional Franchise Areas

         The Company owns 28 cable franchises in the U.K. and holds licenses to
provide cable television and cable telephony services within each of its
franchise areas. The Company's 28 franchises are managed in four Regional
Franchise Areas: (i) London South and South East; (ii) Scotland and North East;
(iii) Avon, Cotswolds and Midlands; and (iv) the North West. The franchises
within each Regional Franchise Area are clustered together, which provides the
Company with several benefits, including (a) providing economies of scale in the


                                       23
<PAGE>
construction and marketing of the cable network and the management of the
franchises, (b) enabling the Company to provide local switching services for a
large number of customers without incurring the high costs of connecting
geographically dispersed areas, (c) providing a regional market for advertisers
that generally is not available through broadcast or satellite media and (d)
enabling the Company to offer local programming on a more cost-effective basis.
Each of the Owned and Operated Franchises are wholly-owned by the Company.

         The following table sets forth certain data concerning the Company's
seven franchise areas at and for the twelve-month period ended December 31,
1997:

<TABLE>
<CAPTION>
                            LONDON     SOUTH                 AVON AND                 NORTH       NORTH
                             SOUTH      EAST     MIDLANDS    COTSWOLDS   SCOTLAND     EAST        WEST       TOTAL
                             -----      ----     --------    ---------   --------     ----        ----       -----
<S>                        <C>        <C>        <C>         <C>         <C>          <C>         <C>      <C>
Franchise homes.........    420,703    493,140     634,839     564,069    666,461     354,098     828,694  3,962,004
Franchise businesses....     29,706     35,690      47,581      42,891     28,584      14,450      61,612    260,514


CABLE TELEVISION
Homes passed............    381,389    262,146     493,833     412,931    561,179     227,228     631,462  2,970,168
Homes passed and            364,264    245,674     451,724     379,254    519,085     215,364     584,819  2,760,184
marketed ...........
Basic customers.........     80,243     63,353      95,385      78,450    113,138      48,827     126,592    605,988
Penetration rate (1)....      22.0%      25.8%       21.1%       20.7%      21.8%       22.7%       21.6%      22.0%
Additional Outlets......     32,398     32,778      22,959      37,364     61,552      25,164      28,574    240,789
Average monthly revenue
per
  customer (1)..........(pound)25.00(pound)23.47(pound)21.87(pound)22.85(pound)25.04(pound)23.13(pound)22.41(pound)23.40
Average churn rate (1)..      34.1%      33.7%       34.9%       34.5%      38.6%       26.9%       31.6%      34.0%


RESIDENTIAL TELEPHONY
Homes passed............    365,115    262,146     466,963     410,228    455,751     223,945     607,536  2,791,684
Homes passed and marketed   357,357    245,694     451,724     379,371    494,891     212,135     583,982  2,725,154
Residential customers (2)    73,397     79,031     151,183     114,264    143,906      69,646     178,931    810,358
Penetration rate (1)....      20.5%      32.2%       33.5%       30.1%      29.1%       32.8%       30.6%      29.7%
Residential lines            78,158     82,121     152,626     119,435    149,097      70,901     183,830    836,168
connected...............
Average monthly revenue
per
  line (1)..............(pound)25.09(pound)20.02(pound)16.95(pound)19.68(pound)18.81(pound)17.76(pound)18.68(pound)19.19
Average churn rate
  per line (1)..........      15.2%      18.1%       20.6%       14.8%      21.0%       15.2%       21.4%      20.0%


BUSINESS TELEPHONY
Business customers......      4,736      1,430       3,364       5,037      4,232       1,603       5,073     25,475
Business lines connected     22,991      5,360      16,440      20,670     13,346       4,111      18,071    100,989
Average number of
business
  lines per customer (1)        4.9        3.7         4.9         4.1        3.2         2.6         3.6        4.0
Average monthly revenue
per
  line (1)..............(pound)51.50(pound)50.23(pound)36.32(pound)38.68(pound)47.16(pound)56.51(pound)37.91(pound)43.62
Average churn rate
  per line (1)..........       5.8%      37.3%        3.2%       17.2%      23.2%       19.5%       21.1%      15.0%

</TABLE>

----------------------------

Notes:

(1)   For the definitions of these terms, see the footnotes to the table on page
      2.

(2)   The information set forth under "Residential Customers" represents the
      number of residential lines connected, which is greater than the actual
      number of residential customers.

   Description of Regional Franchise Areas

         The following is a brief description of each of the Company's four
Regional Franchise Areas:

         London South and South East. The London South and South East Regional
Franchise Area includes the franchise areas formerly designated as London South
and South East. The London South portion of this franchise area covers


                                       24
<PAGE>
approximately 360 square kilometers and includes three franchise areas (Croydon,
Sutton and Merton, and Kingston and Richmond). The London South area has
approximately 421,000 homes and approximately 30,000 businesses and includes a
suburban section of Greater London as well as the large business center of
Croydon. The Croydon franchise was awarded in 1983 and is the oldest one owned
by the Company. Construction of the Croydon network began in 1985. Much of the
Croydon network was constructed before cable telephony generally was offered by
cable operators in the U.K. However, the Company has provided cable telephony
service to business customers in the Croydon business center over its
telephony-only network since 1991 and now offers telephony service to its
residential customers in Croydon. Construction in Croydon for cable television
was substantially completed in 1990 and construction for telephony was completed
in 1996. Construction in the Sutton and Merton franchise began in 1990 and in
the Kingston and Richmond franchise in 1991 and are now both complete.

         The South East portion of this franchise area covers approximately
1,600 square kilometers and includes two franchise areas (North Thames Estuary
and South Thames Estuary) covering the areas of Basildon, Chelmsford, Gravesend
and Maidstone. The South East area has approximately 493,000 homes and
approximately 36,000 businesses. Construction in the South East area began in
February 1994 and is ongoing.

         Avon, Cotswolds and Midlands. The Avon, Cotswolds and Midlands Regional
Franchise Area includes the franchise areas formerly designated as Avon and
Cotswolds, and the Midlands. The Avon and Cotswolds portion of this franchise
area covers approximately 2,120 square kilometers and includes Bath, Bristol,
Cheltenham, Gloucester, Frome, Warminster, Taunton & Bridgewater and
Weston-super-Mare. The Avon and Cotswolds area has approximately 564,069 homes
and approximately 43,000 businesses. Construction in the Avon Area began in 1990
and construction in the Cotswolds area began in July 1994 and construction in
both areas is ongoing.

         The Company granted to Trans-Global a carried interest in respect of
the Avon, Cotswolds and South East areas in connection with the Company's
acquisition of those franchise areas in consideration for services provided by
Trans-Global to the Company in connection with such acquisitions. The carried
interest entitles Trans-Global to certain payments in respect of each such
franchise areas either (a) within 60 days after the fifth anniversary of the
date when 50% of the homes within a given franchise area are passed or (b) at
Trans-Global's option, at any time prior to such date upon 60 days' notice. The
carried interest payments will equal 0.75% of the product of ten times the
annual operating income of such franchise areas (subject to certain
adjustments), after deducting outstanding debt and equity financing and interest
and adding an amount equal to the working capital of such franchise areas (or
subtracting an amount equal to their working capital deficit). The Company does
not expect any such payments to have a material impact on the liquidity or
capital resources of the Company.

         The Midlands portion of this franchise area includes the areas of
Telford, Dudley, Wolverhampton, Worcester, Walsall and Kidderminster. The
Midlands area includes approximately 635,000 homes and approximately 48,000
businesses. Construction for cable television service began in 1991. In 1993, a
retrofit program was undertaken to make both cable television and cable


                                       25
<PAGE>
telephony services available to all homes previously passed in the Midlands area
and, since then, all new construction provides both cable television and cable
telephony services. This retrofit program was completed by the end of 1994, and
all homes passed in the Midlands area are capable of receiving both television
and telephony services. Construction of the Telford franchise was completed in
1994 and construction of the Dudley, Wolverhampton, Walsall and Kidderminster
franchise is ongoing.

           Scotland and North East. The Scotland and North East Regional
Franchise Area includes the franchise areas formerly designated as Scotland and
the North East. The Scotland portion of this franchise area covers approximately
3,000 square kilometers and includes nine franchise areas (Edinburgh, the second
largest financial center in the U.K., as well as Cumbenauld and Monklands,
Dumbarton, Dundee, Falkirk and Livingston, Fife and East Lothian, Glenrothes and
Kirkcaldy, Motherwell and Perth) in the southern region of Scotland. The
Scotland Area covers approximately 666,461 homes and approximately 29,000
businesses. Construction in the Edinburgh franchise began in March 1992 and
construction of the broadband networks in all the other franchises in the
Scotland Area was begun in 1990 by the prior owner of such franchises and is
ongoing by the Company.

           The North East portion of this franchise area covers approximately
640 square kilometers and includes Gateshead, Newcastle upon Tyne, North
Tyneside and South Tyneside. The North East area has approximately 354,000 homes
and approximately 14,000 businesses. Construction in the North East area was
commenced by the previous owner in 1990 but was halted by that owner in 1991.
Construction was restarted by the Company in May 1993 and is ongoing.

          North West. The North West Regional Franchise Area includes the areas
of St. Helens and Knowsley, Wigan, Preston, Southport, North and South Liverpool
and Blackpool. The North West area includes approximately 829,000 homes and
approximately 62,000 businesses. Construction in the North West area began in
1990 and is ongoing.

   Management of Regional Franchise Areas

         The Company manages its Regional Franchise Areas from its corporate
headquarters in Woking, Surrey, England. The Company provides a number of
services on a centralized basis, including finance, legal, management
information services, network design (including switching, centralized planning
and engineering), network service center operations, purchasing of programming
and negotiation and administration of procurement and construction contracts.
Most other matters are handled by the management of the Regional Franchise Areas
under the direction of their Managing Directors. Although marketing programs,
pricing and programming generally are standardized throughout the Company, the
management of each Regional Franchise Area may modify them in order to reflect
local factors.

AFFILIATED COMPANIES

         The Company owns minority equity interests in three Affiliated
Companies: Birmingham Cable, Cable London and Cable Corporation. The Affiliated
Companies own an aggregate of seven cable franchises in the U.K. As of December
31, 1997, the aggregate amount invested by the Company in the Affiliated
Companies was approximately (pound)135.7 million. Of the Company's 4.4 million


                                       26
<PAGE>
equity homes, approximately 400,500 represent the Company's equity interest in
the approximately 1.2 million homes owned and operated by the Affiliated
Companies. These investments have enabled the Company to grow by acquiring
interests in a number of franchises and homes. For information concerning the
implications of the proposed merger of NTL and Comcast on the Company's
interests in Birmingham Cable and Cable London, see "Recent Developments."

         The Company believes that it benefits by the regular exchange of
information with the Affiliated Companies. Although the Company has certain
shareholder rights discussed below and a representative on the board of
directors of each of the Affiliated Companies, the Company does not control the
day-to-day management operations of the Affiliated Companies.

         The following table sets out, unless otherwise indicated, as at and for
the year ended for December 31, 1997, certain information concerning the
Affiliated Companies:

<TABLE>
<CAPTION>
                                         BIRMINGHAM                 CABLE LONDON              CABLE CORPORATION
                                         ----------                 ------------              -----------------
                                                 COMPANY'S                  COMPANY'S                    COMPANY'S
                                                  EQUITY                     EQUITY                        EQUITY
                                     TOTAL       INTEREST        TOTAL      INTEREST       TOTAL          INTEREST
                                    (100%)        (27.5%)       (100%)       (50.0%)      (100%)           (16.5%)
                                    --------    -----------     -------    -----------    -------        ---------
<S>                                <C>            <C>           <C>          <C>          <C>          <C>
FRANCHISE HOMES..............          471,094         129,551    444,978        222,489     293,720         48,464
FRANCHISE BUSINESSES.........           31,200           8,580     35,000         17,500      17,500          2,888

CABLE TELEVISION
Homes passed.................          444,069         122,119    358,707        179,354     279,337         46,091
Homes passed and marketed....          429,638         118,150    345,163        172,582     276,761         45,666
Basic customers..............          116,995          32,174     82,655         41,328      47,652          7,863
Penetration rate (1).........            27.2%           27.2%      23.9%          23.9%       17.2%          17.2%
Additional Outlets...........           35,652           9,804     32,811         16,406      13,694          2,260
Average monthly revenue per
  customer (1)...............     (pound)19.22    (pound)19.22(pound)22.92   (pound)22.92(pound)23.71   (pound)23.71
Average churn rate (1)                   37.6%           37.6%      36.6%          36.6%       37.1%          37.1%

RESIDENTIAL TELEPHONY
Homes passed.................          444,069         122,119    358,707        179,354     281,459         46,441
Homes passed and marketed....          429,638         118,150    345,163        172,582     281,459         46,441
Residential customers........          123,354          33,922     80,193         40,097      62,458         10,306
Penetration rate (1).........            28.7%           28.7%      23.2%          23.2%       22.2%          22.2%
Residential lines connected..          123,354          33,922     84,289         42,145      62,458         10,306
Average monthly revenue per
  line (1)...................     (pound)20.98    (pound)20.98(pound)28.21   (pound)28.21(pound)29.01   (pound)29.01
Average churn rate
  per line (1)...............            28.1%           28.1%      32.1%          32.1%       28.3%          28.3%
BUSINESS TELEPHONY
Business customers...........            3,748           1,031      2,961          1,481       2,087            344
Business lines connected.....           19.379           5,329     12,713          6,357      24,230          3,998
Average lines per customer                 5.2             5.2        4.3            4.3        11.6           11.6
 ........
Average monthly revenue per
  line (1)...................     (pound)56.55    (pound)56.55(pound)61.23   (pound)61.23(pound)86.37   (pound)86.37
Average churn rate
  per line (1)...............            33.1%           33.1%      23.7%          23.7%       11.1%          11.1%

</TABLE>

(1) For the definitions of the terms, see the footnotes to the table on page 2.


                                       27
<PAGE>
   Description of Affiliated Companies

         The following is a brief description of each of the Affiliated
Companies, including a description of the terms of the Company's investments
therein.

           Birmingham Cable. Birmingham Cable covers approximately 400 square
kilometers and operates in Birmingham and Solihull. Birmingham Cable has
approximately 471,000 franchise homes and approximately 31,200 businesses
(representing approximately 130,000 equity homes and approximately 8,600 equity
businesses based on the Company's current share ownership of Birmingham Cable).
The Birmingham cable franchise is one of the largest in the U.K. in terms of the
number of franchise homes.

         Telewest Communications (Holdings) Limited ("TWH") (a wholly owned
subsidiary of the Company) and Comcast U.K. Cable Partners Limited ("Comcast")
jointly own 54.9% of the issued share capital of Birmingham Cable. General Cable
PLC ("General Cable") owns the remaining 44.9%. TWH and Comcast hold their
interests pursuant to a co-ownership agreement (the "Co-ownership Agreement"),
which allocates beneficial ownership of the jointly owned shares between TWH and
Comcast based on the amount each has contributed for the purchase of the shares.
Beneficial ownership of the shares currently is divided equally between TWH and
Comcast. Each party has the right to direct the voting of the shares
beneficially owned by it. TWH and General Cable also own interests in Cable
Corporation.

         Telewest Communications Group Limited, a wholly-owned subsidiary of the
Company ("TWG"), General Cable and an affiliate of Comcast have entered into
consulting agreements with Birmingham Cable and one of its affiliates
(collectively, the "Birmingham Cable Companies") pursuant to which TWG provides
consulting services relating to cable telephony operations, the Comcast
affiliate provides consulting services relating to cable television operations
and General Cable provides consulting services relating to business telephony
operations. Each consultant also provides consulting services relating to the
financial management of the Birmingham Cable Companies. Under TWG's consulting
agreement, the Birmingham Cable Companies have agreed to pay TWG an annual fee
based on the greater of (a) the number of dwelling units in the Birmingham Cable
franchise area and (b) a percentage of the Birmingham Cable companies
consolidated gross revenues. Each consulting agreement terminates in April 2000,
subject to the Birmingham Cable Companies' right to extend the term of each
agreement by two successive five-year periods and a final three-year period. The
Birmingham Cable Companies have the right to terminate the agreements with TWG
and the Comcast affiliate after April 2000 if TWH and Comcast and their
affiliates together cease to be the holder of the largest percentage of the
issued share capital of Birmingham Cable (constituting the "Principal
Shareholder") and the management agreement referred to below is terminated for
the same reason.

         TWG and a Comcast affiliate have entered into a management agreement
with Birmingham Cable that gives TWG and Comcast the right, subject to the
overall direction and control of the directors of the Birmingham Cable
Companies, to manage the day-to-day business and affairs of the Birmingham Cable
Companies. Pursuant to the Co-ownership Agreement, the Comcast affiliate is
entitled to make all the decisions of the co-owners under the management
agreement until the completion of construction passing 90% of the homes in the
Birmingham Cable franchise area and Comcast and its affiliates beneficially own


                                       28
<PAGE>
less than 20% of the shares jointly owned by TWH and Comcast and its affiliates.
Notwithstanding this, TWG retains control over approval of budgets and business
plans relating to cable telephony operations and Comcast retains control over
the budgets and business plans relating to cable television operations.

         Under Birmingham Cable's articles of association, the consent of
holders of 50% or more in aggregate of its issued ordinary share capital
("Majority Investor") and, in certain cases, the holders of 33-1/3% or more (in
aggregate) of its issued ordinary share capital ("Significant Investors") is
required before Birmingham Cable and any of its subsidiaries can take certain
actions relating to themselves or their businesses. Currently, TWH and Comcast
are jointly a Majority Investor and General Cable is a Significant Investor. The
Co-ownership Agreement generally requires TWH and Comcast to agree with respect
to the exercise of their rights relating to their jointly-owned shares.

         TWH and Comcast (as Majority Investors) have the right to appoint four
directors to Birmingham Cable's board of directors and General Cable has the
right to appoint three directors. TWH and Comcast have the right to nominate the
managing director of Birmingham Cable and General Cable has the right to
nominate its Chief Financial Officer. Under the Co-ownership Agreement, the
directors whom TWH and Comcast are entitled to designate by virtue of their
jointly-owned shares will be designated by TWH and Comcast in proportion to the
number of shares beneficially owned by each. As a result, currently TWH has the
right to appoint two directors. The number of directors that TWH and Comcast
have the right to appoint and maintain decreases in stages as their joint
shareholding falls below 50% of the issued ordinary shares of Birmingham Cable.
TWH and the other shareholders have also agreed to certain restrictions with
respect to their right to apply for Cable Television Licenses and
Telecommunications Licenses in areas adjacent to the Birmingham Cable franchise
area.

         The articles of association of Birmingham Cable generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares. The Co-ownership Agreement also generally
provides that neither party thereto shall transfer (including by virtue of
certain changes of control (as defined therein)) its interest in shares of
Birmingham Cable without first offering the other party a right of first refusal
to purchase such shares in accordance with the terms of the agreement. The
Co-ownership Agreement requires a party intending to make such a transfer to
notify the other party of its intention to make such transfer, to participate in
an appraisal of its shares of Birmingham Cable and to offer such shares to the
other party at the appraised value.  See "Recent Developments."

         In February 1995, Birmingham Cable entered into a ten-year (pound)175
million loan facility to finance the construction of its network and operations
(the "Birmingham Credit Facility"). Pursuant to the terms of the Birmingham
Credit Facility, payments or distributions to the shareholders of Birmingham
Cable, including payments of management fees, dividends, interest and principal
on loans to Birmingham Cable from its shareholders, are restricted based on
certain conditions related to the financial performance of Birmingham Cable and
its subsidiaries. Certain financial covenants in the Birmingham Credit Facility
were amended by a Supplemental Agreement dated March 12, 1997. The shareholders
of Birmingham Cable contributed an aggregate of (pound)7 million in equity in
January 1997 and contributed an additional (pound)7 million of equity in the
first quarter of 1998.

                                       29
<PAGE>
         Cable London. Cable London covers approximately 160 square kilometers
and operates in the Camden, Haringey, Enfield, and Hackney and Islington
franchise areas. Cable London has approximately 445,000 franchise homes and
approximately 35,000 businesses (representing approximately 222,000 equity homes
and approximately 17,500 equity businesses based on the Company's current share
ownership of Cable London).

         The Company and Comcast each own 50.0% of the issued share capital of
Cable London. There is no voting arrangement between the Company and Comcast
with respect to Cable London.

         The articles of association of Cable London generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares. A change of control in the shareholding
company will cause the issue by Cable London of a transfer notice in respect of
that company's shares in Cable London to the other shareholder in Cable London.
See "Recent Developments."

         TWG and an affiliate of Comcast have entered into consulting agreements
with Cable London pursuant to which TWG provides consulting services relating to
telephony operations and the Comcast affiliate provides consulting services
relating to cable television operations. Under TWG's consulting agreement, Cable
London has agreed to pay TWG an annual fee based on the greater of (a) the
number of dwelling units in the Cable London franchise areas or (b) a percentage
of the gross revenues of Cable London from telecommunications services. The term
of the consulting agreement expires in accordance with its terms in August 1998.
The consulting agreement may be terminated by TWG upon a change of control of
Cable London.

           In May 1997, Cable London entered into a (pound)170,000,000 loan
facility (the "Cable London Facility") to finance capital expenditure, working
capital and costs of construction and operation of all cable telephony and
television franchises of Cable London and its subsidiaries, general corporate
purposes and to re-finance the (pound)60,000,000 loan facility entered into by
Cable London in June 1995. Pursuant to the terms of the Cable London facility,
payments or distributions to the shareholders of Cable London, including
payments of dividends, loans or other payments or interest on them, or payments
of principal or interest on subordinated debt are restricted. Certain payments
are permitted if made in the ordinary course and payment of dividends or
payments on subordinated debt are only permitted after June 30, 2001 provided
that certain financial covenants are met. Management fees accruing at the rate
of (pound)55,000 per month may be paid from time to time provided that certain
financial covenants are met. As a condition precedent to the completion of Cable
London Facility, the Company and Comcast UK Cable Partners Limited, the
principal shareholders of Cable London, entered into deeds of subordination
which provide that prohibited payments otherwise due to the shareholders from
Cable London and its subsidiaries would accrue and would not be paid until all
sums due under the Cable London facility has been satisfied. Cable London will
be required to repay (pound)40,000,000 of the Cable London Facility on June 30,
1999 and the remainder of the facility will be repaid commencing on December 31,
2001 in six monthly instalments, to be completely repaid by June 30, 2006.
Voluntary prepayment is permitted. The facility has been secured by a cross
guarantee and debentures by Cable London and its subsidiary companies, and each
of the Company and Comcast UK Cable Partners Limited have granted a mortgage


                                       30
<PAGE>
over the shares they hold in Cable London in favor of the CIBC Wood Gundy Plc as
security agent for the banks, CIBC Wood Gundy Plc, The Bank of New York and
Banque Paribas.

           Cable Corporation. Cable Corporation covers approximately 490 square
kilometers and operates in the Windsor franchise area (including Windsor,
Slough, Maidenhead, Staines, Ashford and Iver) and the Middlesex franchise area
(including the London boroughs of Hounslow and Hillingdon). Cable Corporation
has approximately 294,000 franchise homes and approximately 17,500 businesses
(representing approximately 49,000 equity homes and approximately 3,000 equity
businesses based on the Company's current share ownership of Cable Corporation).

         TWH owns 16.5% of the issued share capital of Cable Corporation. The
remaining 83.5% is owned by General Cable.

         TWG has entered into a consulting agreement with Cable Corporation and
certain of its affiliated companies (the "Cable Corporation Companies") pursuant
to which TWG provides consulting services relating to telephony operations.
Under this agreement, the Cable Corporation Companies have agreed to pay TWG an
annual fee based on the greater of (a) the costs incurred in providing
consulting services to the Cable Corporation Companies or (b) a percentage of
the gross revenues of the Cable Corporation Companies from cable telephony
business. The consulting agreement continues in effect until December 31, 1998
and thereafter is renewable from year to year unless terminated on one year's
notice by either party.

         Under Cable Corporation's articles of association, the consent of the
holders of not less than 15% of its issued ordinary share capital ("Significant
Investors") is required before Cable Corporation and any of its subsidiaries can
take certain actions in relation to themselves or their businesses. The Company
is a Significant Investor. Each Significant Investor has the right to appoint up
to two directors to Cable Corporation's board of directors.

         The articles of association of Cable Corporation generally prohibit a
shareholder from transferring legal or beneficial ownership of its shares
without giving each other shareholder a right of first refusal to acquire its
proportionate amount of such shares. Transfers by certain corporate shareholders
to affiliates generally are excluded from this restriction.

         In March 1996, the Cable Corporation entered into financing
arrangements, including a nine-year (pound)16 million loan facility and certain
finance leases to finance the construction of its network and operations (the
"Cable Corporation Credit Facility"). The Cable Corporation Credit Facility was
terminated in December 1997 when the Cable Corporation was party to a
re-financing of General Cable Holdings Limited ("GCHL"), under which GCHL
received a revolving and term credit facility of up to (pound)500 million.


                                       31
<PAGE>
EMPLOYEES

         At December 31, 1997, the Company had 4,408 employees. None of these
employees is covered by collective bargaining agreements. The Company believes
that its relationship with its employees is good.

COMPETITION

         The Company's cable television and cable telephony businesses compete
with a wide range of companies using a variety of technologies.

   Cable Television

   General

         Broadband cable franchise licenses currently are awarded in the U.K. on
an exclusive basis for each prescribed area. However, the current Labor
Government in the U.K. stated in its election manifesto in 1997 that it intended
to review the Conservative Government's position supporting the exclusive
franchise regime. The Company believes that such review will begin soon,
although there can be no assurance if or when any such review will be commenced,
what the scope or conclusions of such a review will be or what the impact of any
such conclusions will be on the Company.

         The Company currently compete with television programming provided by
terrestrial stations, DTH satellite services, video cassette rental stores,
satellite master antenna television systems and certain narrowband cable system
operators, and will compete with digital terrestrial services and may in the
future compete with programming provided by video-on-demand and other
entertainment services provided by PTOs. The Company also competes with other
companies (which may include PTOs and other cable operators) for the award of
new franchises, the purchase of existing franchises and new sources of capital.

         The principal current and potential competitors for the cable
television business of the Company are the following:

   Broadcast

         Television viewing in the U.K. has long been one of the most popular
forms of entertainment and daily viewing time in the U.K. has been among the
highest in the world (weekly average of more than 26 hours per person during the
fourth quarter of 1997). Five broadcast channels are the predominant source of
television programming. Although the terrestrial television channels in the U.K.
generally are perceived as providing high-quality programming, an independent
market research study indicates that viewers have a desire for a wider variety
of television programming. This study indicates that in the U.K., more than
one-third of all viewing in homes with cable television or satellite services
was of cable or satellite channels. The Company believes that acceptance of
alternative programming, together with the relatively high penetration of DTH
satellite services and VCRs (discussed below) evidences a willingness by many
consumers in the U.K. to pay for additional programming.


                                       32
<PAGE>
         The Company believes that its primary competitive advantages over
terrestrial television are significantly more programming options, access in the
future to interactive and integrated entertainment, communication and
information services and, in some areas, improved television reception. The
Company believes that the principal competitive advantage of terrestrial
television is its historical position as the leading source of in-home
entertainment in the U.K.

   DTH Satellite

         In a DTH satellite system, a satellite television service provider
obtains programming from a variety of sources (including most of those used by
the Company) and transmits the programming signal up to a satellite which then
retransmits the signal down to customers. In order to receive satellite service
in the U.K., the customer must have an outdoor reception dish, which generally
is smaller and less expensive than the "C-band dish" typically used in the U.S.,
and some form of decoder.

         DTH satellite services are widely available in the U.K. and are
becoming increasingly popular. DTH satellite penetration has increased from
approximately 500,000 homes in 1989 to 4,000,000 at December 31, 1997. BSkyB is
the leading supplier of satellite programming in the U.K. The "Sky Multi
Channels" package provided by BSkyB (which includes ten channels provided by
Flextech or a provider in which an affiliate of TCI has an interest) offers
customers 30 basic channels, four premium channels and three bonus channels.

         BSkyB is the principal competitor of the Company in pay television as
well as one of its most important sources of programming. The Company purchases
most of the channels provided by BSkyB to its DTH satellite customers.

         The Company believes that DTH satellite services will continue to be
significant competitors of the Company in the future. However, the Company
believes that cable television has a number of competitive advantages over DTH
satellite service, including the following: (a) DTH satellite service involves
up-front or ongoing costs for the purchase or rental of a dish and related
equipment, which are substantially higher than the up-front or ongoing equipment
costs for cable television, (b) satellite dishes are considered to be unsightly
by many and are prohibited by some U.K. planning guidelines, (c) cable offers a
sophisticated two way physical link, and in the future will offer interactive
and integrated entertainment, telecommunications and information services in
addition to television programming and (d) DTH satellite television generally
does not provide local programming. The Company believes that the principal
competitive advantage of DTH satellite service is the generally lower monthly
service charges for basic services and premium services than comparable services
provided by cable operators.

         BSkyB has indicated that it intends to launch a digital service in late
1998 which may provide up to 200 channels including mulitplexed movies,
interactive services such as home shopping, home banking and "pay-per-view"
sports and movies. The Company intends to launch a digital service in one
franchise in the second half of 1998 although there can be no assurance that
this will be achieved and a delay may have a negative impact on the Company's
offering if it is launched after the satellite digital offering. BSkyB intends
to offer digital services through an alliance with British Interactive
Broadcasting (BIB). BIB intends to subsidise BSkyB digital set top boxes. BIB,

                                       33
<PAGE>
whose shareholders include BT, BSkyB and Midland Bank and Matsushita, has yet to
be approved by the European Commission.

   Digital Terrestrial Television Broadcasting

         Under the Broadcasting Act 1996, the ITC has been given responsibility
for the licensing and future regulation of digital terrestrial television which,
on introduction, is expected to provide 30 or more terrestrial channels serving
between 60% and 90% of the U.K. population. Existing terrestrial broadcasters
are given guaranteed capacity to simulcast their existing analogue services. In
1997, Carlton Communications and Granada Group formed a joint venture and
acquired a licence from the ITC for three transmission frequencies to initially
provide 15 digital terrestrial television channels. These channels are expected
to broadcast programming that may include BSkyB programming currently available
only through DTH satellite or cable television as well as programming from the
BBC. Digital terrestrial television will broadcast from land-based transmitters
and will be receivable by consumers with conventional aerials. A digital decoder
box or integrated digital television set would be needed to view the new
channels, which are expected to have digital picture and sound quality. The
introduction of digital terrestrial, as well as digital satellite television
will provide additional competition for the Company. See "Certain Regulatory
Matters -- Future Developments -- Digital Broadcasting."

   Video Cassette Rentals

         In 1997, approximately 88% of the homes in the U.K. owned at least one
VCR. The Company believes that this penetration evidences a willingness by many
consumers in the U.K. to pay for programming in addition to that provided by the
terrestrial broadcasters. The Company believes that the principal competitive
advantages of cable television over videotape rentals include elimination of the
need for consumers to leave their premises to pick up and return the video
cassette and cost (cable programming is significantly less expensive on a
per-program basis than rental of videotapes). The principal advantages of
videotape rental over cable television are that it provides the consumer with
more flexibility in selecting specific programming and the timing of the
delivery of such programming and films generally are released earlier for video
cassette rentals than for satellite and cable television. This advantage may be
reduced by the development by cable operators of pay-per-view programming, which
would give cable customers more control over the specific programming viewed and
the timing of such programming.

   Video-on-Demand/Pay-Per-View

         Video-on-demand will provide individual customers with the ability to
request a specific program for viewing at specified times. Currently, no
video-on-demand service is commercially available in the Company's franchises.
BT has undertaken a pilot program for this service to the homes of a limited
number of BT employees. However, the successful introduction of a
video-on-demand service in the Company's franchise areas, particularly by a PTO,
would result in the services of the Company being subject to increased
competition. In the event a video-on-demand service is offered before the
Company's service is offered, the Company's service could be adversely affected.
In addition, to the extent that any future video-on-demand services offer more
flexibility than the Company's services, the Company's services could be
adversely affected.

                                       34
<PAGE>
         BSkyB currently offers its DTH satellite service customers pay-per-view
services throughout the U.K., including in the Company's franchises. Cable &
Wireless Communications plc ("CWC") (successor to a merger with Mercury
Communications and certain U.K. cable operators) currently offers BSkyB's
pay-per-view service to its customers over its cable network. The Company
currently offers a limited pay-per-view service for selected sporting events and
intends to offer its "Front Row" comprehensive pay-per-view movie service
starting in the first half of 1998.

   SMATV and Narrowband Systems

         SMATV systems receive television signals from either broadcast or
satellite sources and then distribute them by cable to a discrete area of
customers, typically within a limited geographic area (such as a block of flats)
to less than 1,000 homes. Narrowband systems, which typically serve more than
1,000 homes, are underground cable distribution systems that have significantly
less channel capacity than the broadband systems used by the Company. The
narrowband systems carry only a limited range of broadcast and satellite
programming and provide no voice telephony services. Most narrowband systems are
relatively old and serve only limited geographical areas within certain of the
Regional Franchise Areas (i.e., the Avon and Cotswolds, North East and South
East franchise areas). The Company believes that currently there are only a few
SMATV systems licensed for or operating in the franchise areas of the Company
and the Company has a right of first refusal on any new SMATV systems license
issued for its franchise areas. There also are a number of old narrowband
systems that are licensed for or operating in the franchise areas of the
Company.

   Other Cable Operators

         Although cable operators in the U.K. generally co-operate on a variety
of technical, programming and marketing matters, the operators do compete for
the award of new franchises, the purchase of existing franchises and sources of
capital. Certain cable operators that compete with the Company now or in the
future may have greater financial resources or other advantages which may
increase their likelihood of obtaining desirable franchises.

   New Technologies

         The extent to which new media and technologies will compete with cable
television systems in the future cannot be predicted and such media or
technologies may become dominant in the future and render cable television
systems less profitable or even obsolete. For example, the U.K. Government
recently announced that it intends to release additional frequencies of the
radio spectrum (via auction) for use in the provision of advanced mobile
services. Certain of such frequencies would be used for broadband and broadcast
applications which could provide increased competition for the Company.

   Cable Telephony

   General

         BT is the largest provider of telephony services for residences and
businesses in the U.K. Historically, CWC, (successor to the merger with Mercury
Communications Limited) has focused on the business market and long-distance and
international telephony services, and has attempted to increase its share of the


                                       35
<PAGE>
business telephony market. Cable operators have started to expand into the
telephony market and, according to the ITC, there were approximately 3,442,200
cable telephony lines in the U.K. as at January 1, 1997, as compared to
approximately 2,039,100 as at December 31, 1996.

   BT

         BT is the principal competitor of the Company in providing telephony
services to residential and small- and medium-sized business customers. BT has
an established market presence, fully-built network and resources substantially
greater than those of the Company.

         The Company seeks to compete with BT primarily by emphasizing the
competitive cost and, to a lesser extent, service advantages of its cable
telephony services.

         To date, the Company generally has been able to price its cable
telephony call charges below those of BT. There can, however, be no assurance
that it will be able to continue to do so in the future. BT currently is subject
to regulatory controls over the prices it may charge customers. See "Certain
Regulatory Matters -- Cable Telephony -- Price Regulation." As a result of these
controls, BT has in the past implemented and will in the future be required by
its Telecommunications License to reduce its prices further in each of the next
few years. The Company has modified its rates in order to maintain its price
advantage over BT. There can be no assurance, however, that any such price cuts
will not adversely impact the profitability of the telephony operations of the
Company.

         The Company believes that BT's competitive strength has been enhanced
until recently by the lack of number portability in the U.K. The Company
believes that many consumers have been reluctant to transfer their telephony
service away from BT or Mercury service until number portability was available.
The Company has rolled out number portability to all of its Regional Franchise
Areas. See "Certain Regulatory Matters --Cable Telephony -- Number Portability."

   CWC

         The Company also competes with CWC in providing business telephony
services and, to a lesser extent, residential telephony services. The Company
competes with CWC primarily based on price and services offered. CWC has
resources substantially greater than those of the Company, and there can be no
assurance that CWC will not expand its business or residential telephony
services in the Company's existing markets or that the Company will be able to
continue to compete successfully with CWC. See "Industry Background and Company
History -- Industry Background."

   Energis Communications

         Energis has substantially finished construction of a national broadband
network along existing electrical power pylons to provide telephony services. To
date, Energis has not marketed residential telephony lines and generally has
concentrated on the smaller business telephony market. The Company expects to
compete with Energis primarily based on price and services offered.


                                       36
<PAGE>
   Other Competitors

         The Company also competes in its telephony business with over 160
licensed operators including service providers such as Ionica L3 and Colt
Communications. Mobile cellular telephony networks such as Cellnet (in which BT
has a 60% interest), Vodafone, Mercury One2One (in which affiliates of U S WEST
have a 50% interest) and Hutchison Microtel's "Orange" service, also provide
telephony service to customers. Currently, there are a number of competitors who
either are offering national services or are looking to offer national services.
The Company believes that this increased competition will lead to a broad range
of new packages and promotions, thereby resulting in a decrease in the price of
U.K. calls. For smaller customers, these new suppliers are likely to offer
indirect services as they may not be able to justify direct connection.

ACQUISITIONS AND DISPOSALS
         Although the Company's strategy currently is to build on its existing
customer base and increase penetration and revenues per customer, in order to
increase revenues and economies of scale, the Company may from time to time
acquire one or more new or existing franchises either in public tenders by the
ITC, acquisitions from other cable operators or acquisitions of other cable
operators. The Company believes that there may be attractive acquisition
opportunities in the future as some of the existing franchise holders decide to
divest all or a portion of their U.K. for strategic or other reasons or
shareholders of other operators determine that their prospects would be enhanced
as part of a larger group with the Company. In that regard, the Company has in
the past, currently is and may in the future, engage in discussions regarding
acquisitions and business combinations in the U.K., some of which may be
significant and any of which may ultimately lead to acquisitions or business
combinations. Any such acquisitions or combinations may be funded, to the extent
available, from internally generated funds, the incurrence of indebtedness or
the issuance of equity, or a combination thereof.

         For information concerning certain discussions between the Company and
General Cable, see "Recent Developments".

CERTAIN REGULATORY MATTERS

   General

         Cable television and cable telephony operators in the U.K. are governed
by legislation, regulations and licenses issued under the Cable and Broadcasting
Act 1984 as construed by the Broadcasting Act 1990 (as amended by the
Broadcasting Act 1996) (the "Broadcasting Act") and the Telecommunications Act
1984 (the "Telecommunications Act"). An operator of a cable television and cable
telephony franchise in the U.K. covering more than 1,000 homes requires the
following two licenses for each franchise area:

         (a) a telecommunications license (a "Telecommunications License"),
granted under the Telecommunications Act by the Secretary of State for Trade and
Industry (the "Secretary of State"), which authorizes the installation and
operation of the telecommunications network used to provide cable television and
telecommunications services, and

                                       37
<PAGE>
         (b) a cable television license (a "Cable Television License"), which
authorizes the provision of cable television services within a defined
geographical area and which may be either:

                 (i)    a prescribed diffusion service license ("PDSL"), granted
                        under the Cable and Broadcasting Act 1984 prior to
                        January 1, 1991 by the Cable Authority and continued in
                        effect by virtue of provisions of the Broadcasting Act,
                        which allows an operator to provide cable television
                        services by means of a cable network; or

                 (ii)   a local delivery service license ("LDSL"), granted since
                        January 1, 1991 under the Broadcasting Act by the ITC
                        which allows an operator to deliver television and other
                        licensed programming services by means of a licensed
                        telecommunications network, including a cable network or
                        microwave distribution system.

         The Telecommunications Licenses and Cable Television Licenses contain
various conditions concerning the operation of the licensed telecommunication
system and the provision of broadcast services, respectively and, in the event
that such conditions are breached, the Director General or the ITC, as
appropriate, may take action to enforce compliance with such licenses. The ITC
or the Secretary of State has the power ultimately to revoke such licenses.

   Cable Television

   The Broadcasting Act

         The Broadcasting Act 1990 established the ITC to license and regulate
commercial television services (terrestrial and satellite) and the Radio
Authority to regulate radio services. The ITC's functions are, among other
things, to grant licenses for television broadcasting activities and to regulate
the commercial television sector by issuing codes on programming, advertising
and sponsorship, monitoring programming content and enforcing compliance with
the Broadcasting Act and license conditions. The ITC has the power to vary
licenses and impose fines and revoke licenses in the event of a breach of the
license conditions. The ITC also enforces ownership restrictions on those who
hold or may hold an interest in licenses issued under the Broadcasting Act. The
Broadcasting Act 1990 has been amended by the Broadcasting Act 1996. The
licensing provisions remain substantially the same, although some amendments
were made with regard to broadcast and radio services, including ownership
restrictions (see below).

   Cable Television Licenses

   General. As at December 31, 1997, Cable Television Licenses had been granted
for franchise areas covering approximately 17.0 million homes in the U.K. The
ITC is also advertising and awarding LDSLs to extend coverage to those areas not
otherwise licensed. To date, the Company has been awarded four (for the
Southport, East Lothian, Taunton and Blackpool franchises). LDSLs are awarded
under competitive bids to the applicant submitting the highest cash bid (payable
annually over the 15-year term of the LDSL), unless it appears to the ITC that
there are "exceptional circumstances" (primarily geographic coverage) which make


                                       38
<PAGE>
it appropriate to award the license to another applicant. In addition, all
applicants must undertake to pay a percentage of qualifying revenue ("PQR") to
the ITC in each year of the license together with an annual sum equal to the
cash bid indexed against inflation plus certain other payments.

         Under the Broadcasting Act, cable operators may carry certain licensed
services on their networks. Cable Television Licenses also require cable
operators to ensure that advertising and certain foreign satellite programs
carried by them as part of their services conform to the restrictions set forth
in the codes on advertising, sponsorship and programming issued by the ITC.

         All new LDSLs awarded to the Company since December 1994 include build
milestone obligations.

   Term, Renewal and Revocation of Broadcasting Licenses. The Company holds both
PDSLs and LDSLs. The terms and renewals of such licenses are governed by the
Broadcasting Act as follows:

         (a) Each of the Company's PDSLs was issued for a 15-year term but
applications may be made to the ITC for supplemental licenses which have the
effect of extending the term of the PDSLs for up to an additional eight years if
the cable operator holds a 23-year Telecommunications License. Fees continue to
be payable on the same basis as the PDSLs, but no PQRs or sums equal to the cash
bids will be payable during this extended term. If the Company elects to extend
the PDSL (as the Company has done in certain cases), upon expiration of such
PDSLs as so extended, the Company would be required to apply for a new LDSL
under the competitive bid procedures described above. If the Company elects not
to extend a PDSL, the Company may apply to the ITC (no earlier than five years
prior to the expiration of the PDSL) for a 15-year LDSL with respect to which it
must agree with the ITC on the amount of the cash bid and the PQR payments that
will be payable over the term of the LDSL.

         (b) Each of the Company's LDSLs was issued for a 15-year term and this
term corresponds to the term of the predecessor PDSL or to a term commencing on
December 31, 1990, whichever is later. The term of the Company's LDSLs may not
be extended, but the Company may apply to the ITC (no earlier than five years
prior to the expiration of the LDSL) for a new 15-year LDSL, with respect to
which it must agree with the ITC on the amount of cash and PQR payments that
will be payable over the term of the LDSL.

         The ITC can, after consultation with the Department of Trade and
Industry (the "DTI") and the Director General, revoke a Cable Television License
if an operator fails to comply with its conditions or with any direction of the
ITC and the ITC considers revocation to be in the public interest. If there is
any change in either the nature or characteristics of an operator that is a
corporate entity, or any change in the persons controlling or having an interest
in it, the ITC can revoke the license if it would not have awarded the license
had the new ownership or control existed at the time the application for the
license originally was considered. The ITC also can impose fines and shorten the
license period for licenses issued under the Broadcasting Act.


                                       39
<PAGE>
         A Cable Television License is transferable with the consent of the ITC.

   Ownership Restrictions. The ITC has a general duty to ensure that Cable
Television Licenses are held by "fit and proper" persons and may exercise
control over who may hold a license where financial assistance is provided to,
or influence is exercised over, a licenseholder which may produce results
adverse to the public interest. The Broadcasting Act also contains specific
restrictions on the types of entities which may hold Cable Television Licenses
or interests therein. Cable Television Licences may not be held by, among
others, the BBC, a local authority, a religious or political body (or one of its
officers) or any advertising agency or any entity controlled by it.

         The Secretary of State is also empowered to control accumulations of
interests in different licensed activities.

         Price Regulation. Cable television pricing in the U.K. is not subject
to pricing restrictions, including pricing limitations, rate of return
assumptions or similar mechanisms of the kind imposed under U.S. cable
regulations. However, cable television pricing is subject to fair trading
regulation by the ITC and to the application of general competition law.

Digital Broadcasting

         The Broadcasting Act 1996 introduced provisions for the licensing of
digital terrestrial broadcasting and introduced a "must carry" requirement on
cable companies where both program provider and cable operator use digital
technology to ensure the universal availability of designated free-to-air
service channels. Must carry obligations concerning public service channels
already apply to holders of PDSLs.

         The Broadcasting Act 1996 permitted the initial availability of six
television multiplexes, or frequency bands giving substantial national
terrestrial coverage, each with the ability to carry several television
channels. The legislation included provisions for the ITC's licensing of
"multiplex providers", who were allocated, in aggregate, the six multiplexes for
12-year license periods. Each multiplex provider will contract with broadcasters
for the transmission of the broadcasters' television services via its allocated
frequency band. The initial capacity available for DTT is divided into six
transmission networks, each of which will be able to carry a number of different
television channels. These networks are known as "multiplexes". Of these six
multiplexes, two are wholly reserved for existing broadcasters who are
guaranteed places on the multiplexes under the Broadcasting Act 1996. The first
will be used by the BBC to transmit existing programmes in digital form and
develop new digital services. The second is reserved for channel 3, channel 4
and Teletext Ltd. This multiplex will be licensed and regulated by the ITC.
Licences to operate the remaining four were advertised and 3 have now been
awarded to British Digital Broadcasting plc (BDB). The fourth multiplex has been
awarded S4C Digital Networks Ltd. It will carry the new channel 5 and S4C in
Wales

         The Advanced Television Services Regulations, which implemented the
Advanced Television Services Directive (Council Directive 95/47/EC on the use of
standard for the transmission of television signals) (the "ATS Regulations")
came into effect on January 7, 1997. The ATS Regulations cover the provision of
digital television services by means of conditional access systems (e.g., by
encryption and subscription management systems). They also amend the


                                       40
<PAGE>
Telecommunications Act 1984 to include subscriber management services as
telecommunications services, and the systems over which these services are
provided as telecommunication systems, in each case subject to the general
telecommunications licensing and regulatory regime. The ATS Regulations amended
existing telecommunications licences so that conditional access services may
only be provided under the Class License for the running of telecommunications
systems for the provision of conditional access services (the "Conditional
Access Class License"). The ATS Regulations impose an enforceable statutory duty
on the provider of conditional access services to ensure that the system used to
provide those services has the necessary technical capability for cost effective
transcontrol at cable head-ends allowing for the possibility for full control by
cable television operators at local or regional level of the services using that
conditional access system. "Transcontrol" is the process by which the
conditional access operator's control data is removed and replaced so as to
enable the rebroadcast of the programming using the cable operator's own
conditional access system. There is also a supplemental duty on the conditional
access service provider to co-operate with the cable television operator
(including by provision of information on a timely basis) to ensure that the
latter can take advantage of the primary duty. The ATS Regulations impose duties
on the operators of conditional access services who do not simply self-provide
(i.e., who do not produce and market those services to third parties) to offer
technical services to broadcasters of digitally transmitted services on fair
reasonable and non-discriminatory terms so that viewers can receive the
broadcasters' services over their own networks.

         Apart from the effect of the ATS Regulations, the provision of
conditional access services is regulated under the Conditional Access Class
License, issued on January 7, 1997. The Conditional Access Class License
regulates the provision of encryption services, subscriber authorization
services, subscriber management services and any other conditional access
service in connection with digital television services. The provider of such
services is required, unless it is only a self-provider, to offer them to
broadcasters on a fair, reasonable and non-discriminatory basis and to
co-operate to ensure the interconnectivity and interoperability of its system so
that the relevant services can be provided. Where a cable operator retransmits a
broadcaster's digital television services, the operator of a conditional access
service who provides conditional access services to the broadcaster must
co-operate with the cable operator so that the cable operator can transcontrol
and re-transmit those services cost-effectively and without incurring
unnecessary and unreasonable expense. The Conditional Access Class License also
incorporates the "fair trading" condition and other conditions including those
relating to prohibition on undue preference and undue discrimination, linked
transactions, publication of charges, essential interfaces, intellectual
property rights and separation of financial accounts. Access control provisions
relating to the provision of digital interactive services were included in U.K.
telecommunications class licences as of December 31, 1997. The same provisions
will be included in all U.K. telecommunications licences (including the
Company's Telecommunications Licenses) following the DTI consultation with the
industry during 1998. These Access Control provisions allow for OFTEL to
regulate digital interactive services. The Director General recently published
guidelines on the conditional access licence and on conditional access pricing.


                                       41
<PAGE>
         Media Ownership

         The Broadcasting Act 1996 amends the media ownership rules contained in
the Broadcasting Act 1990. It relaxes the earlier rules limiting ownership
between terrestrial television, satellite and cable broadcasters, except for
those broadcasters which are already more than 20% owned by a newspaper with
more than 20% national newspaper circulation. Qualifying terrestrial
broadcasters are now allowed to have controlling interests in cable and
satellite companies, provided their total interests do not exceed 15% of the
total television market (defined by audience share including public service
broadcasters) and qualifying cable companies will be able to control terrestrial
television companies, subject to the 15% total television market limit and
certain restrictions on the number of terrestrial licenses held. Newspaper
groups with less than 20% national newspaper circulation are now able to control
television broadcasters constituting up to 15% of the total television market,
subject to a limit on the number of terrestrial licenses held, unless the ITC
decides that such control would be against the public interest. Newspaper
companies, the license holders of Channel 3 and Channel 5 and satellite and
cable broadcasters, are to have the ability to control any number of digital
terrestrial television licenses, in addition to any analogue licenses.

         Previous U.K. Government proposals have also contemplated a more
integrated system of media ownership and control in the longer term, to take
account of the increasing number of broadcasters and technological convergence,
and involving regulation of the media-market as a whole. The Company can give no
assurance as to whether these proposals for regulation will be enacted or, if
they were enacted, as to what their content would be or what effect they might
have on the Company's business.

   Cable Telephony

   Telecommunications Act

         The Telecommunications Act provides a licensing and regulatory
framework for telecommunications activities in the U.K. and established the
office of the Director General (supported by OFTEL), as an independent
regulatory authority. Telecommunications policy is overseen by the DTI. The
Secretary of State also has primary licensing authority under the
Telecommunications Act, although he may delegate that authority to the Director
General. The principal functions of the Director General are, among other
things, to monitor and enforce compliance with Telecommunications License
conditions, establish and administer standards for telecommunications equipment
and contractors, investigate complaints and exercise certain functions to
promote or ensure competition in telecommunications markets. The Director
General may modify Telecommunications Licenses either with the agreement of the
licensee following a statutory period of public consultation or following a
report of the MMC. The Director General is also empowered to issue enforcement
orders requiring compliance with Telecommunications License conditions which
have been breached.

   Telecommunications Licenses

   General. A Telecommunications License authorizes a cable operator to install
and operate the physical network used to provide cable television and
telecommunications services. It also authorizes the operator to connect its
system to other television and telecommunications systems, including those
operated by the terrestrial broadcasting authorities, satellite broadcasters and


                                       42
<PAGE>
PTOs. Although the Telecommunications License granted to a cable operator is for
a particular franchise area, it is not exclusive and, as a result, a cable
telephony operator is subject to competition in its franchise area with respect
to the provision of telephony services from PTOs (such as BT, CWC and Colt) and
other telephony service providers.

         A cable operator's Telecommunications License contains conditions
regulating the manner in which the licensee operates its telecommunications
system, provides telecommunications services, connects its systems to others and
generally operates its business. A cable operator's Telecommunications License
also contains a number of detailed provisions relating to the technical aspects
of the licensed system (e.g., numbering, metering and the use of technical
interfaces) and the manner in which the licensee conducts its business (e.g.,
publicity of certain prices, terms and conditions). In addition, a cable
operator's Telecommunications License contains prohibitions on undue preference
and discrimination in providing service. The cable operator's Telecommunications
License also requires the licensee to comply with certain codes of practice and
to provide information which the Director General may require to carry out his
statutory functions.

         All the Company's Telecommunications Licences have been amended by the
Director General of OFTEL to replace a number of existing conditions dealing
with specific forms of anti-competitive behavior with a "fair trading"
condition. This will enable the Director General to act against anti-competitive
behavior such as predatory pricing and undue cross-subsidization. The Director
General has published guidelines on the types of behavior which he considers to
be anti-competitive and on the enforcement procedure to be used. In addition all
Telewest telecommunications licences have been modified, resulting in some
obligations (e.g., Consumer Code of Practice), being removed but with others,
(e.g., an obligation to provide number portability) being implemented. In
addition to those Telecommunications Licenses obtained for its cable franchise
areas, the Company was also awarded Telecommunication Licenses on January 14,
1997 for all those geographic areas for which it does not hold Broadcasting
Licenses and an International Facilities Licence on December 17, 1996,
permitting the Company to provide full international telecommunications
facilities and services.

         The fees payable for the Telecommunications License consist of an
initial fee payable on the grant of the license and annual fees thereafter. The
fees are based on a proportion of the costs of the Director General in
exercising his functions under the Telecommunications Act. OFTEL recently
established a consultation with the industry on a new framework for licence
fees.

         A Telecommunications License is not transferable. However, a change of
control of a licensee may be permitted subject to compliance with a notification
requirement, provided the proposed change is not, in the opinion of the
Secretary of State, against the interests of national security or relations with
the government of a country or territory outside the U.K.

   Network Construction. Other than for LDSL licenses granted since December
1994, each Telecommunications License prescribes milestones that require the
licensee to construct its network to pass a specified number of premises by
certain dates. All but the final milestones may be varied by the Director
General "if he considers it to be in the interests of sound commercial
development" of the system. The final milestone can be modified only following a


                                       43
<PAGE>
public comment period and with the approval of the Director General. If the
milestones are not met, the Director General may take enforcement action which,
if not complied with, could result in the revocation of the Telecommunications
License by the Secretary of State. For a discussion of the Company's current
milestones and certain amendments being sought with respect thereto, see
"Broadband Network".

         A cable operator is not required to provide voice telephony services,
but where it does so and achieves a 25% or more share of the relevant market (as
determined by the Director General) within its licensed area, the licensee may,
at the direction of the Director General, be required to ensure that voice
telephony services are available to anyone in the licensed area who reasonably
requests them. No such direction has been received by the Company.

         Under a Telecommunications License, the cable operator is subject to
and has the benefit of the Telecommunications Code promulgated under the
Telecommunications Act. The Telecommunications Code provides certain rights and
obligations with respect to installing and maintaining equipment such as ducts,
cables and cabinets on public or private land (including the installation of
equipment on public highways). Cable operators also have the benefit of the New
Roads and Street Works Act 1991 which provides them with the same rights and
responsibilities with respect to construction on public highways as other public
utilities. Cable operators generally are required to post bonds with local
authorities in respect of their obligation to ensure reinstatement of roads and
streets in the event the operators becomes insolvent, ceases to carry on
business or has its Telecommunications Licenses terminated. In order to install
equipment on private property, cable operators must obtain the agreement of
occupiers, property owners and others.

   Term, Renewal and Revocation of Telecommunications Licenses.
Telecommunications Licenses for cable operators originally were granted for an
initial period of either 15 or 23 years (depending on the technology used by the
licensee), commencing on the date service was first provided to customers. In
July 1992, following the Duopoly Review, technology-related discrimination in
license length was abandoned. The U.K. government invited all holders of 15-year
Telecommunications Licenses to apply for new 23-year licenses. However, a
licensee also had the right to extend a 15-year Telecommunications License to 23
years if it provided certain technical undertakings within five years of the
date of the original license grant. To date, the Company has given such
undertakings with respect to all of its Telecommunications Licenses and,
consequently, the Company's Telecommunications Licenses will expire at various
times between 2008 and 2017.

         Upon expiration, a Telecommunications License cannot be renewed and
application must be made for a new license.

         A Telecommunications License may be revoked if the licensee fails to
pay the license fees when due, if the licensee fails to comply with an
enforcement order, upon the occurrence of certain insolvency-related events or
if any Cable Television License relating to a licensee's system is revoked. A
Telecommunications License may also be revoked if, among other things, the
licensee fails to give the required notification to the DTI of changes in
shareholdings and agreements affecting control of the licensee or if the DTI
concludes that any such change would be against the interests of national
security or the U.K. government's international relations.


                                       44
<PAGE>
   Duopoly Review

         In 1991, the U.K. government concluded in its Duopoly Review that the
termination of the duopoly policy (which permitted only BT and Mercury to
operate local, national or international fixed-link networks in the U.K. to
provide public telephony services) might increase competition and benefit
consumers in the U.K. telecommunications market. As a result, the U.K.
government revised its policy and determined that applications for licenses
would be considered from any person seeking to operate new telecommunications
networks over local or national fixed links within the U.K. Such licenses
normally would be granted subject to the general statutory duties of the
Director General to ensure the provision of telecommunications services, to
satisfy all reasonable demands for them, and the ability of a person providing
the services to finance their operations. At the time of the Duopoly Review, the
exclusive right of BT and Mercury to provide international fixed links within
the U.K. was maintained. On December 17, 1996, the Government removed this
protection and licensed more than 40 companies (including the Company) to
provide full international telecommunications facilities.

   Interconnect Arrangements

         The ability of cable operators to provide viable voice and other
telecommunications services is dependent on their ability to interconnect
cost-effectively with the telecommunications networks of the other PTOs in order
to complete calls that originate from a customer on their cable network but that
terminate off their network or that originate from a customer off their cable
network and terminate on their network. Since the Duopoly Review, cable
operators have been able to connect their networks without regard to whether
they are under common ownership without using the services of BT or Mercury, and
with national telecommunications licenses, cable operators are able to link
non-contiguous franchises over their private networks (such as the Company's
Interfranchise Network).

         PTOs are required under their telecommunications licenses to enter into
interconnection agreements with other PTOs such as the Company (if requested to
do so by such a PTO), and the Company has interconnection agreements with BT,
Mercury, ACC UK Long Distance Limited and Telstra, as well as certain other
cable operators. The BT agreements may be terminated by either party upon two
years' notice, the Mercury agreement may be terminated by either party upon one
years' notice and, the Telstra Agreement may be terminated by either party on 90
days notice. If the Company is unable to negotiate acceptable terms (including
pricing) with BT, Mercury or Telstra in connection with any continuation or
extension of these agreements or scheduled reviews of these agreements, the
Company may request that the Director General determine such terms. A recent
case has established that it is possible for a regulated company to challenge a
determination by the Director General of terms of interconnection agreements in
the U.K. courts. The Director General also has the power to make determinations
in respect of certain obligations of any party under an interconnection
agreement.

         Through October 1997, OFTEL determined standard interconnect charges.
The first interim charge determination covered the period from April 1, 1995 to
March 31, 1996. Interim charges were based on forecast financial statements (on
a fully allocated costs basis). Final charges may involve a readjustment of
charges made under the interim determination where appropriate. Interim and


                                       45
<PAGE>
final charges for the period from April 1, 1996 to September 30, 1997 currently
are being determined by OFTEL. Since October 1997, a network change CAP of RPI -
8% is imposed by OFTEL across various baskets of BT interconnect services. Price
movements within the baskets are regulated through a system of "ceilings" and
"floors", the latter being based on BT's long run average incremental costs.

   Price Regulation

         Although to date the Company generally has been able to price its cable
telephony call charges below those of BT, there can be no assurance that it will
be able to continue to do so in the future. BT currently is subject to controls
over the prices it may charge customers, including a requirement that the
overall charges it makes for a basket of services, including local,
long-distance and international calls, which for the period up to July 31, 1997
could not be increased by more than (or must be reduced by) an amount equal to
the change in the Retail Price Index ("RPI") less 7.5% per annum. As part of its
ongoing review of BT's pricing, in February 1996 OFTEL removed the price
controls on BT's line charges, thus enabling BT to rebalance line and call
charges. For the period July 31, 1997 to July 31, 2001, OFTEL has implemented a
new price cap on BT of RPI-4.5%. This price cap is to be applied to BT
residential customer prices only, and all BT business prices are excluded. In
general, the price controls impose downward pricing pressure in the U.K.
telephony market, and any change in such controls may influence the Company's
pricing policies.

         BT's license has also now been modified to include the fair trading
conditions which prohibits BT from engaging in anti-competitive activity. This
provision gives OFTEL broad powers to stop anti-competitive activity by BT,
including with respect to pricing. Procedural guidelines have been issued
regarding the application of the condition.

         The level of cable telephony service prices charged by the Company and
other service providers other than BT currently are not regulated by the
Director General, but only in the context of the Fair Trading condition in all
PTO licences.

   Number Portability

         In September 1996, with the introduction of "number portability" in the
U.K., the Company began offering BT customers the opportunity to transfer their
service to the Company without changing their existing telephone number. The
Company has now introduced number portability in all of its franchises for
residential and business customers of all service providers (as required by the
Company's Telecommunications Licenses).


                                       46
<PAGE>
    Europe Regulation

         The U.K. Government has implemented the European Directives on
Licensing and Interconnection. The Company believes that the interconnection
directive will be amended to include pre-carrier selection "equal access," which
is expected to apply to operators with significant market power in the first
instance. The U.K. cable industry is currently negotiating with the UK
Government on the obligation for accounting separation as provided by the
European Interconnection Directive.

         The European Commission currently is consulting with member states on
amendments to the Voice Telephony and Cable Directives. The European Commission
has published a Green Paper on Convergence, this being the first stage of a
consultation on the regulation needed across telecommunications, broadcasting
and IT in the long term.

   Restrictions on National PTOs

         The Duopoly Review maintains restrictions upon BT and other national
PTOs (except Ionica and Liberty) which prevent BT from conveying or providing
entertainment services (such as the cable television services currently provided
by the Company) over their national telecommunications networks. The previous
U.K. Government stated that the restrictions upon the conveyance of such
services may be reviewed in 1998, but the restrictions regarding provision by
the PTOs themselves would not be reviewed until at least 2001. The Duopoly
Review policy did not, however, prevent the national PTOs from providing cable
television services of the kind currently provided by the Company so long as
such services are provided by separate subsidiaries of the national PTOs under
separate licenses similar to those held by the Company.

ITEM 2.  PROPERTIES

         The Company's principal properties consist of numerous offices,
technical facilities, warehouses, customer services centers and retail outlets
in the various Regional Franchise Areas and Woking, Surrey. As of March 1, 1998,
the Company owned and leased an aggregate of approximately 750,000 square feet
(258,000 square feet of which was owned and 492,000 square feet of which was
leased). The Company's headquarters and network service center occupy
approximately 80,000 square feet of leased space located in Woking, Surrey. The
Company believes that its current properties are adequate for its current needs
and additional space can be obtained on reasonable terms to accommodate future
growth, if needed.

ITEM 3.  LEGAL PROCEEDINGS

         The Company has not been involved in any legal or arbitration
proceedings which have had during the 12 months preceding the date of this
Report, or which are reasonably likely to have, a significant effect on the
Company's financial position, nor, so far as the Company is aware, is any such
proceeding pending or threatened.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.


                                       47
<PAGE>
                                    * * * * *
                      EXECUTIVE OFFICERS OF THE REGISTRANT

         Pursuant to General Instructions G(3), the following information is
included as an additional item in Part I:

<TABLE>
<CAPTION>
      Name                           Age(1)             Position Held
      ----                           ------             -------------
<S>                                <C>                 <C>
Stephen J. Davidson                  42                 Chief Executive
Charles J. Burdick                   46                 Group Finance Director
David R. Van Valkenburg              55                 Group Operations Director
Richard H. Evans                     55                 Group IT Director
Samuel V. Howe                       43                 Director of Marketing
Adrian T. Howe                       36                 Group Financial Controller
Victoria M. Hull                     35                 General Counsel and Company Secretary
J. Howard Watson                     34                 Managing Director of Network Services
Glenn V. Tookey                      40                 Managing Director of Business Services

</TABLE>

----------------------

(1)      As of March 1, 1998

         Mr. Davidson has served as a director of the Company since April 1994.
He was appointed Chief Executive of the Company in February 1997 and had been
Acting Chief Executive since August 1996. Mr. Davidson served as the Finance
Director of the Company from January 1993 until August 1996. Previously, he
worked for four years at Bankers Trust Company in London where he was a Managing
Director with responsibility for clients in the media business throughout
Europe.

         Mr. Burdick was appointed Group Finance Director in February 1997 and
had been Acting Group Finance Director since September 1996. He was Vice
President Finance and Assistant Treasurer at U S WEST Inc. from 1990 to October
1996. Prior to joining U S WEST Mr. Burdick worked in Treasury and Corporate
Development positions at Time Warner and Carnation International.

         Mr. Van Valkenburg has served as a director of the Company and as Group
Operations Director since June 1997. He is also Executive Vice President for U S
WEST International Inc. in London and, prior to commencing work at the Company,
was responsible for overseeing the development of U S WEST International's
broadband cable interests in mainland Europe and South America from January 1996
to June 1997. Previously, from December 1994 until December 1995 he was a Senior
Vice President for the Multimedia Group of U S WEST Media Group, Inc. Prior to
this he was President and Chief Operating Officer for MultiVision Cable TV Corp.
(a partnership with Merrill Lynch and General Capital Corp.) from April 1990
until December 1994.

         Mr. Evans has served as Group IT Director of the Company since July
1996. Previously he worked with Pearl Assurance plc as General Manager from 1992
through June 1996.

                                       48
<PAGE>
         Mr. S. Howe has served as Director of Marketing since June 1995.
Previously he worked for SBCC as Group Director - Marketing from July 1993 to
May 1995 and for Cox as Director - Finance and Administration from April 1992 to
June 1993.

         Mr. A. Howe has served as Group Financial Controller since May 1995.
Previously he worked for BT for four years, his last role being Acting Finance
Director of the Personal Communications Division of BT.

         Ms. Hull has served as General Counsel and Company Secretary since July
1994. Prior to joining the Company she was a solicitor in the corporate
department of Clifford Chance, where she qualified in 1987.

         Mr. Watson has served as Managing Director of Network Services of the
Company since November 1995. Previously, he was Director of Engineering from
June 1995 until October 1995. Prior to joining the Company he was Engineering
Manager of Cablecom Group of GPT from 1991 until June 1993.

         Mr. Tookey has served as Managing Director of Business Services of the
Company since August 1997. He joined the Company in March 1996 as Business
Services Director of the South East franchise area. Previously he worked for BT
for twenty years, most recently working as in Product Marketing, Marketing and
Development.


                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET PRICE OF ORDINARY SHARES AND AMERICAN DEPOSITARY SHARES; RECORD HOLDERS;
DIVIDENDS

     The information required by this item is included in the 1997 Annual
Report to shareholders under the headings, "Share and ADS Information,"
"Registrar and Depositary" and "CREST - Share Settlement System" on pages 78 and
79 and is incorporated herein by reference.

CERTAIN TAX CONSEQUENCES OF OWNERSHIP OF ORDINARY SHARES AND ADSs.

GENERAL

     The following generally summarizes the principal U.K. and U.S. federal
income tax consequences of the purchase, ownership and disposition of Ordinary
Shares or ADSs (evidenced by ADRs) that are residents or citizens of the U.S.
and hold the Ordinary Shares or ADSs as capital assets ("U.S. Holders"). BECAUSE
THIS IS A GENERAL SUMMARY, PROSPECTIVE PURCHASERS OF ORDINARY SHARES OR ADSS WHO
ARE U.S. HOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE U.S. FEDERAL, STATE AND LOCAL TAX CONSEQUENCES, AS WELL AS TO THE U.K. TAX
CONSEQUENCES, OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF ORDINARY SHARES OR
ADSS APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS.


                                       49
<PAGE>
     The statements of U.S. federal income tax and U.K. tax law set out below
are based (a) on the laws in force, and as interpreted by the relevant taxation
authorities, as of the date of this Proxy Statement, and are subject to any
changes (which may apply retroactively) in U.S. or U.K. law, or in the
interpretation thereof by the relevant taxation authorities, or in the
conventions between the U.S. and the U.K. relating to income and capital gains
(the "Income Tax Convention") and estate and gift taxes (the "Estate and Gift
Tax Convention"), occurring after such date and (b) in part, on representations
of the Depositary and on the assumption that each obligation in the Deposit
Agreement and any related agreement will be performed in accordance with its
terms.

     This summary does not address the laws of any state or locality or any
foreign government (other than the U.K.). Further, this summary does not address
the tax consequences to particular classes of taxpayers that are subject to
special rules including, without limitation, dealers in securities or
currencies, insurance companies, tax exempt organizations, financial
institutions, persons that hold their Ordinary or ADSs as part of a straddle,
hedging or "conversion transaction", persons whose functional currency is other
than the U.S. dollar, tax-exempt investors or persons owning directly,
indirectly or constructively, 10% or more of the Company's stock. This summary
does not address the U.K. or U.S. tax treatment of persons who hold Ordinary
Shares or ADSs through a partnership or other pass-through entity. Except to the
limited extent discussed below, it does not consider the U.K. tax or U.S. tax
consequences to a person other than a U.S. Holder (a "Non-U.S. Holder").

     For purposes of the Conventions and the Code, U.S. Holders will be treated
as the owners of the Ordinary Shares represented by ADSs evidenced by ADRs.
Accordingly, and except as noted below, the U.K. tax and U.S. federal income tax
consequences discussed below apply equally to beneficial owners of both Ordinary
Shares and ADSs that are U.S. Holders.

TAXATION OF DIVIDENDS

     For the purposes of this summary, the term "Eligible U.S. Holder" means a
beneficial owner of an ADS or an Ordinary Share (a) that derives and
beneficially owns the cash dividend paid thereon, (b) that is an individual, a
corporation, a trust or estate resident in the U.S. (and, in the case of a
corporation, not also resident in the U.K. for U.K. tax purposes) for the
purposes of the Income Tax Convention and (c) whose holding is not effectively
connected with a "permanent establishment" through which the Eligible U.S.
Holder carries on business in the U.K. with a "fixed base" in the U.K. from
which the Eligible U.S. Holder performs independent personal services. Such term
excludes, however, (a) a beneficial owner who owns at least 10% of the Ordinary
Shares in respect of which the dividend is paid, (b) under certain
circumstances, a corporation 25% or more of the capital of which is owned
directly or indirectly by one or more persons who are not individual residents
or nationals of the U.S. and (c) a U.S. corporation that controls, directly or
indirectly (either alone or with one or more associated corporations), 10% or
more of the voting stock of the Company.

     The Company is required, when paying a dividend in respect of the Ordinary
Shares, to account to the U.K. Inland Revenue for a payment known as advance
corporation tax ("ACT"). The rate of ACT at present is equal to 25% of any
dividend paid to shareholders, which is equivalent to 20% of the sum of the
dividend and the related ACT. It was recently proposed that the duty to account
for ACT in respect of dividends paid will be abolished from 1999.

                                       50
<PAGE>
     An Eligible U.S. Holder is entitled under the Income Tax Convention and
current U.K. law to claim from the U.K. Inland Revenue a refund of an amount
equal to the ACT paid by the Company in respect of the dividend (the "Tax Credit
Amount"), but subject to a 15% U.K. withholding tax on the combined sum of the
dividend paid and the related Tax Credit Amount. For example, assuming
continuance of ACT at the rate of 25% of a dividend paid, a dividend of
(pound)8.00 paid to such an Eligible U.S. Holder would generally entitle the
Eligible U.S. Holder to claim (pound)0.50 (a Tax Credit Amount of (pound)2.00
less a withholding of (pound)1.50) from the U.K. Inland Revenue, giving a total
cash received, after U.K. taxes but before U.S. taxes, of (pound)8.50. Under
current proposals the rate of tax credits will be reduced from 20% of the sum of
the dividend and tax credit to 10% of such amount on dividends paid on or after
April 6, 1999 with the result that an Eligible U.S. Holder would not be entitled
to claim any refund of an amount attributable to a Tax Credit Amount.

     If the Eligible U.S. Holder is a U.S. trust or estate, the Tax Credit
Amount will be available only to the extent that the income derived by such
trust or estate is subject to U.S. tax as the income of a resident either in its
hands or in the hands of its beneficiaries, as the case may be.

     In respect of dividends paid before April 6, 1999 for U.S. federal income
tax purposes, the gross amount of a dividend plus the Tax Credit Amount,
including the 15% U.K. withholding tax thereon, (a) will be included in gross
income by a U.S. Holder and (b) will be treated as foreign source dividend
income to the extent paid out of current or accumulated earnings and profits as
determined for U.S. federal income tax purposes. Subject to certain limitations,
including certain holding period requirements with respect to the Ordinary
Shares or ADSs, the 15% U.K. withholding tax will be treated as a foreign income
tax eligible for credit against such Eligible U.S. Holder's federal income tax
(or, alternatively, a deduction in computing such U.S. Holder's taxable income).
The consequences of these limitations will depend on the nature and sources of
each Eligible U.S. Holder's income and the deductions appropriately allocated or
apportioned thereto. In general, no dividends received deduction will be allowed
with respect to dividends paid by the Company. The amount of the dividend will
be the U.S. dollar spot value of the dividend on the date of receipt, regardless
of whether the payment is in fact converted into U.S. dollars on such date.
Exchange gain or loss, if any, recognized by an Eligible U.S. Holder on a sale
or other disposition of pounds received pursuant to the dividend will generally
be U.S. source ordinary income or loss.

         For dividends paid on or after April 6, 1999 (assuming that the current
proposals are enacted) an Eligible U.S. Holder who receives the (pound)8
dividend in the above example for U.S. federal income tax purposes would be
considered to receive a dividend of (pound)8.89 ((pound)8 dividend plus the 89p
tax credit) and would include that amount in income. Such U.S. Holder also would
be considered to have paid 89p of U.S. tax that, subject to the limitations
described above, would be creditable against such Eligible U.S. Holder's US
federal income tax liability.

     Arrangements exist with the U.K. Inland Revenue under which certain
Eligible U.S. Holders of ADSs (i.e., (a) a U.S. corporation, (b) an individual
resident in the U.S. and not resident in the U.K. or (c) a trust or estate all


                                       51
<PAGE>
the beneficiaries of which are resident in the U.S. or Canada) generally will
receive directly from the Company together with the payment of the associated
dividend payment of the Tax Credit Amount to which such Holder is entitled, net
of the applicable U.K. withholding tax, without the need to file a claim for
refund. To claim the benefit of the arrangements, the registered holder must
complete the declaration on the reverse of the dividend check confirming the
Eligible U.S. Holder's entitlement to the Tax Credit Amount and present the
check for payment within three months from the date of issue of the check. These
arrangements can be terminated or altered without notice by the U.K. Inland
Revenue.

     In addition, arrangements exist with the U.K. Inland Revenue under which an
Eligible U.S. Holder of Ordinary Shares will receive payment of the U.K. tax
credit at the same time as and together with the payment of the associated
dividend. In order to receive such payment, the Eligible U.S. Holder must have
the Ordinary Shares registered in the name of a nominee approved by the U.K.
Inland Revenue for such purpose, and the nominee must follow certain procedural
requirements. In addition, the qualifying holder must be either: (a) an
individual who: (i) is not resident in the U.K. and does not retain the use of
any accommodation in the U.K., (ii) has not during the previous four years been
in the U.K. for as much as three months a year on average, or for a period or
periods amounting in the aggregate to six months in the relevant U.K. income tax
year; (iii) has not been absent from the U.S. for a complete U.S. tax year in
any of the previous four years; (iv) does not have a permanent establishment in
the U.K. and (v) does not own 10% or more of the class of shares in respect of
which the dividend is paid; or (b) a corporation: (i) which is managed and
controlled in the U.S. and does not have a permanent establishment in the U.K.;
(ii) which does not, either alone or together with one or more associated
corporations, control, directly or indirectly, 10% or more of the voting power
in the Company; (iii) which does not own 10% or more of the class of shares in
respect of which the dividend is paid; (iv) which is liable to U.S. tax on the
dividend and (v) at least 75% of the capital of which is owned directly or
indirectly by persons who are U.S. residents. These arrangements will be
extended to trusts, estates in the course of administration, pension funds,
foundations and similar bodies only with the prior approval of the U.K. Inland
Revenue.

     Certain Eligible U.S. Holders who are not entitled to receive payment of
the U.K. Tax Credit Amount from the Company with payment of the associated
dividend but who, nevertheless, are entitled to a refund of the Tax Credit
Amount, net of the U.K. withholding tax, must file a claim for the Tax Credit
Amount in the manner described in U.S. Revenue Procedure 80-18, 1980-1 C.B. 623,
as modified by U.S. Revenue Procedures 81-58, 1981-2 C.B. 678; 84-60, 1984-2
C.B. 504, and 90-61, 1990-2 C.B. 657. Claims for tax refund must be made within
six years of the U.K. year of assessment (generally the 12-month period ending
April 5 in each year) in which the related dividend was paid. The first claim by
a claimant for a tax credit under these procedures is made by sending the
appropriate U.K. form (FD/13) in duplicate to the Director of the Internal
Revenue Service Center with which the holder's last U.S. federal income tax
return was filed. Forms may be available from the U.S. Internal Revenue Service
Assistant Commissioner (International), 950 L'Enfant Plaza South, S.W.,
Washington, D.C. 20024, Attention: Taxpayers Service Division. Because a refund
claim is not considered made until the U.K. tax authorities receive the
appropriate form from the U.S. Internal Revenue Service, forms should be sent to
the U.S. Internal Revenue Service well before the end of the applicable
limitation period. Any claim by a claimant after the first claim by such a U.S.


                                       52
<PAGE>
Holder for payment under these procedures should be filed directly with the U.K.
Financial Intermediaries and Claims Office, Fitz Roy House, P.O. Box 46,
Nottingham, England, NG2 1BD.

     Under Section 812 of ICTA 1988, the U.K. government has the power to deny
the payment of associated U.K. tax credits under the Income Tax Convention to a
corporation that controls, directly or indirectly, either alone or together with
one or more corporations, which are treated as associated for the purposes of
the Income Tax Convention, at least 10% of the voting power of the Company, if
it or an "associated company" (as defined in Section 416 ICTA 1988) has a
"qualifying presence" (as defined in Section 812 ICTA 1988) in a state in the
U.S. which operates a unitary system of corporation taxation. These provisions
will come into force only if the U.K. government so determines by statutory
instrument. No such instrument has yet been made.

     Subject to the discussion below regarding backup withholding tax, a
Non-U.S. Holder of Ordinary Shares or ADSs generally will not be subject to U.S.
federal income or withholding tax on dividends received on Ordinary Shares or
ADSs, unless such income is effectively connected with the conduct of a trade or
business in the U.S. and, in general, in the case of a Non-U.S. Holder entitled
to benefits under a tax treaty, attributable to a permanent establishment or
fixed base in the U.S.

TAXATION OF CAPITAL GAINS

     A U.S. Holder who is not resident or ordinarily resident in the U.K. for
U.K. tax purposes will not be liable for U.K. tax on capital gains realized or
accrued on the sale or other disposal of Ordinary Shares or ADSs unless the
Ordinary Shares or ADSs are held in connection with a trade, profession or
vocation carried on by such U.S. Holder in the U.K. through a branch or agency
which constitutes a permanent establishment or fixed base and the Ordinary
Shares or ADSs are or have been used, held or acquired for the purposes of such
trade, profession or vocation of such branch or agency. A U.S. Holder will be
liable for U.S. federal income tax on such gains to the same extent as on any
other gains from sales or disposition of stock.

     Assuming that gain on the disposition of Ordinary Shares or ADSs would not
be subject to U.K. tax, such gain would be U.S. source income for U.S. foreign
tax credit limitation purposes. Deposits and withdrawals of Ordinary Shares by
U.S. Holders in exchange for ADSs will not result in the realization of gain or
loss for U.K. capital gains tax or U.S. federal income tax purposes.

     Subject to the discussion below of backup withholding, a Non-U.S. Holder of
Ordinary Shares or ADSs will not be subject to U.S. federal income or
withholding tax on gain realized on the sale of Ordinary Shares or ADSs unless
(i) such gain is effectively connected with the conduct by the Non-U.S. Holder
of a trade or business in the U.S. and, in general, in the case of a Non-U.S.
Holder entitled to benefits under a tax treaty, such gain is attributable to a
permanent establishment or fixed base in the U.S. or (ii) in the case of gain
realized by an individual Non-U.S. Holder, the Non-U.S. Holder is present in the
U.S. for 183 days or more in the taxable year of the sale and certain other
conditions are met.

                                       53
<PAGE>
U.S. INFORMATION REPORTING AND BACKUP WITHHOLDING

     U.S. Holders are generally subject to information reporting requirements
with respect to dividends paid in the U.S. on Ordinary Shares or ADSs. Under
existing regulations, such dividends are not subject to back up withholding.
However, under regulations generally effective January 1, 1999, such dividends
paid in the United States would be subject to back up withholding. Non-U.S.
Holders will not be subject to information reporting or back up withholding with
respect to dividends on Ordinary Shares or ADSs, unless payment is made through
a paying agent (or office) in the U.S. Non-U.S. Holders generally will be
subject to information reporting (and, under regulations generally effective
from January 1, 1999, to back up withholding at a rate of 31%) with respect to
the payment within the U.S. of dividends on Ordinary Shares or ADSs, unless the
holder provides a taxpayer identification number, certifies to its foreign
status, or otherwise establishes an exemption.

     U.S. Holders generally will be subject to information and back up
withholding at 31% on proceeds paid from the disposition of Ordinary Shares or
ADSs unless the U.S. Holder provides an IRS Form W-9 or otherwise establishes an
exemption. Non-U.S. Holders generally will be subject to information reporting
and back up withholding at a rate of 31% on the payment to or through the U.S.
office of a broker, whether domestic or foreign, of proceeds from the
disposition of Ordinary Shares or ADSs, unless the holder provides a taxpayer
identification number, certifies to its foreign status or otherwise establishes
an exemption. Non-U.S. Holders will not be subject to information reporting or
back up withholding with respect to the payment by a foreign office of a broker
of proceeds from the disposition of Ordinary Shares or ADSs provided, however,
that, if the broker is a U.S. person or "U.S. related person," information
reporting (but not back up withholding) will apply, unless the broker has
documentary evidence in its records of the Non-U.S. Holder's foreign status, the
Non-U.S. Holder certifies to its foreign status under penalties of perjury or
otherwise establishes an exemption. For this purpose, a "U.S. related person" is
a foreign person who has one or more specific relationships with the U.S.

     The amount of any back up withholding will be allowed as a credit against
such holder's U.S. federal income tax liability and may entitle such holder to a
refund, provided that the required information is furnished to the U.S. Internal
Revenue Service.

PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS

     The Company generally will be a passive foreign investment company ("PFIC")
for U.S. federal income tax purposes for any taxable year (i.e., the period from
January 1 to December 31) in which either (a) 75% or more of its gross income is
passive income or (b) on average for the taxable year, 50% or more of its assets
(measured by U S tax basis) produce or are held for the production of passive
income. The Internal Revenue Service has indicated that cash balances, even if
held as working capital, are considered to be passive assets that produce
passive income. As of the date of this Proxy Statement, the Company does not
believe it is a PFIC for U.S. federal income tax purposes, and, based on current
projections, the Company does not anticipate that it will become a PFIC. No
assurance can be given, however, that the Company will not become a PFIC in the
future.

                                       54
<PAGE>
     The Company will monitor its status and, promptly following the end of any
taxable year, will notify shareholders if it believes that it is properly
classified as a PFIC for that taxable year, in which case it will comply with
the reporting requirements necessary for U.S. Holders to elect to treat the
Company as a "qualified electing fund" (a "QEF election"). If the Company were a
PFIC, U S Holders of Ordinary Shares or ADSs may suffer unfavourable U S federal
income tax consequences. This summary does not address the consequences were the
Company determined to be a PFIC. U.S. Holders should consult their own tax
advisers concerning the U.S. tax consequences of holding Ordinary Shares or ADSs
if the Company were considered to be a PFIC, including the consequences of
making a QEF election.

U.K. ESTATE AND INHERITANCE TAX

     An Ordinary Share or ADS beneficially owned by an individual U.S. Holder
who is domiciled in the U.S. for the purposes of the Estate and Gift Tax
Convention and is not domiciled in the U.K. for such purposes is not subject to
U.K. inheritance tax on the individual's death or U.K. gift tax on a gift made
by the individual during his lifetime except where the Ordinary Share or ADS is
part of the business property of a U.K. "permanent establishment" of the
individual or pertains to a U.K. "fixed base" of an individual used for the
performance of independent personal services. The Estate and Gift Tax Convention
generally provides for tax paid in the U.K. to be credited against any tax
payable in the U.S. and for tax paid in the U.S. to be credited against any tax
payable in the U.K., based on priority rules set forth in that Convention, in a
case where an Ordinary Share or ADS is subject both to U.K. inheritance tax and
to U.S. federal gift or estate tax. There are special individual rules applying
to trusts. Ordinary Shares or ADSs held in a trust created by a U.S. Holder who
is not domiciled in the U.K. normally will fall outside the scope of U.K.
inheritance tax.

STAMP DUTY AND STAMP DUTY RESERVE TAX

     Stamp duty reserve tax at the then-applicable rate arises upon the deposit
with the Depositary of the Ordinary Shares. The current rate of stamp duty
reserve tax is (pound)1.50 per (pound)100 (or part thereof). The stamp duty
reserve tax on the initial deposit of the Ordinary Shares represented by the
ADSs was paid by the Company. On the transfer of further Ordinary Shares to the
Depositary, stamp duty reserve tax will be payable by the Depositary and under
the Deposit Agreement, holders of ADRs must pay an amount equal to such tax to
the Depositary.

     Provided that the instrument of transfer is not executed in the U.K. and
remains at all subsequent times outside the U.K., no U.K. stamp duty will be
payable on the acquisition or transfer of ADSs evidenced by ADRs, nor will an
agreement to transfer ADSs evidenced by ADRs give rise to a liability to stamp
duty reserve tax.

     A transfer of Ordinary Shares by the Depositary or its nominee to the
beneficial owner of the relevant ADS or its nominee when the beneficial owner is
not transferring beneficial ownership will give rise to U.K.
stamp duty at the rate of 50p per transfer.

     Purchasing Ordinary Shares, as opposed to ADSs, will normally give rise to
a charge to U.K. stamp duty or stamp duty reserve tax at the rate of 50p per
(pound)100 (or part) of the price payable for the Ordinary Shares. Stamp duty


                                       55
<PAGE>
and stamp duty reserve tax generally are the liabilities of the purchaser. Where
such Ordinary Shares are later transferred to the Depositary's nominee, further
stamp duty or stamp duty reserve tax will normally be payable at the rate of
(pound)1.50 per (pound)100 (or part thereof) of the value of the Ordinary Shares
at the time of transfer. However, where Ordinary Shares being acquired are
transferred directly to the Depositary's nominee, the only charge will generally
be the higher charge of (pound)1.50 per (pound)100 (or part) of the price
payable for the Ordinary Shares so acquired.

     The U.K. government has announced its intention to abolish both stamp duty
and stamp duty reserve tax in respect of the transfer of securities from a date
which has not yet been announced.

ITEM 6.  SELECTED FINANCIAL DATA

         The information required by this item is included in the 1997 Annual
Report to Shareholders under the heading "Supplementary Financial Information --
Five Year Summary" on page 77 and is incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         The information required by this item is included in the 1997 Annual
Report to Shareholders under the heading "Financial Review" on pages 14 to 21
and is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Not required.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required by this item is included in the 1997 Annual
Report to Shareholders under the heading "Financial Statements under U.S. GAAP"
on pages 57 to 77 and is incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item with respect to executive
officers is set forth in Part I under the heading "Executive Officers of the
Registrant" on pages 48 to 49 hereto.

                                       56
<PAGE>
         The information required by this item with respect to directors is
included in the 1998 Proxy Statement under the headings "Reappointment of
Directors" and "Compliance with Section 16(a) of the U.S. Securities Exchange
Act of 1934" on pages 6 to 11 and page 22 and is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this item is included in the 1998 Proxy
Statement under the heading "Executive Compensation" on pages 15 to 19 and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is included in the 1998 Proxy
Statement under the headings "Security Ownership of Principal Shareholders" on
pages 2 to 5 and "Security Ownership of Directors and Executive Officers" on
page 14 and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is included in the 1998 Proxy
Statement under the heading "Certain Relationships and Related Transactions" on
pages 19 to 20 and is incorporated herein by reference.


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

1.    FINANCIAL STATEMENTS.

Included in Part II, Item 8 of this report (by incorporation by reference to the
1997 Annual Report to Shareholders) are the following:

         Independent Auditors' Report

         Consolidated Statement of Operations for the years ended December 31,
         1997, 1996 and 1995

         Consolidated Balance Sheet at December 31, 1997 and 1996

         Consolidated Statement of Cash Flows for the years ended December 31,
         1997, 1996 and 1995

         Consolidated Statement of Shareholders' Equity for the years ended
         December 31, 1997, 1996 and 1995

         Notes to the Consolidated Financial Statements


                                       57
<PAGE>
2.    FINANCIAL STATEMENT SCHEDULES.

All schedules are omitted because the required information is not applicable or
is included in the financial statements or related notes.

3.    EXHIBITS AND REPORTS ON FORM 8-K.

<TABLE>
<CAPTION>
(a)   Exhibits.
<S>                       <C>
         3.1        --     Memorandum of Association of the Company. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B, filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         3.2        --     Articles of Association of the Company. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B, filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         4.1        --     Amended and Restated Deposit Agreement, dated as of November 30, 1994 (as amended
                           as of October 2, 1995), among the Company, The Bank of New York, as Depositary,
                           and the holders from time to time of American Depositary Receipts issued
                           thereunder.  (Incorporated by reference to the Company's 1995 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on April 1, 1996).

         4.2        --     Form of American Depositary Receipt (included in Exhibit 4.1).

         4.3        --     Senior Debenture Indenture, dated as of October 3, 1995, between the Company and
                           The Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           April 1, 1996).

         4.4        --     Senior Discount Debenture Indenture, dated as of October 3, 1995,  between the
                           Company and The Bank of New York, as Trustee. (Incorporated by reference to the
                           Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on April 1, 1996).

         4.5        --     Form of Senior Debenture (included in Exhibit 4.3).

         4.6        --     Form of Senior Discount Debenture (included in Exhibit 4.4).

         4.7        --     Deposit Agreement, dated as of October 3, 1995, between the Company and The Bank
                           of New York, as Book-Entry Depositary. (Incorporated by reference to the Company's
                           1995 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on April 1, 1996).


                                       58
<PAGE>
         10.1       --     Relationship Agreement, dated as of November 22, 1994, by and among Old Telewest,
                           certain subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.2       --     Shareholders Agreement, entered into as of November 22, 1994, between certain
                           subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.3       --     Registration Rights Agreement, dated October 3, 1995, among the Company, the TCI
                           Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate.
                           (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on April 1, 1996).

         10.4       --     Co-Operation Agreement, dated October 3, 1995, between the SBC Affiliates and the
                           Cox Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on April 1, 1996).

         10.5       --     Share Dealing Agreement, dated October 3, 1995, among the TCI Affiliate, the U S
                           WEST Affiliates, the Company and the SBC Affiliates. (Incorporated by reference to
                           the Company's 1995 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on April 1, 1996).

         10.6       --     Tax Deed, dated November 22, 1994, between TCI International Holdings, Inc., U S
                           WEST Holdings and Old Telewest. (Incorporated by reference to Old Telewest's 1994
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           March 31, 1995).

         10.7       --     Trademark License Agreement, effective as of November 22, 1994, between Old
                           Telewest and U S WEST.  (Incorporated by reference to Old Telewest's 1994 Annual
                           Report on Form 10-K filed with the Securities and Exchange Commission on March 31,
                           1995).

         10.8       --     Tradename Agreement, effective as of November 22, 1994, between Old Telewest, TCI
                           and TCI/U S WEST Cable Communications Group. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.9       --     Tax Deed, dated October 3, 1995, among the Company, the SBC Affiliates and the Cox
                           Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form
                           10-K filed with the Securities and Exchange Commission on April 1, 1996).


                                       59
<PAGE>
         10.10      --     Consultant Agreement for Operational Assistance, dated July 17, 1992, among
                           Birmingham Cable Corporation Limited ("BCCL"), Birmingham Cable Limited ("BCL")
                           and Telewest Communications Group Limited ("Telewest CGL"). (Incorporated by
                           reference to Old Telewest's Registration Statement on Form S-1 filed with the
                           Securities and Exchange Commission on April 29, 1994, as amended (Registration No.
                           33-78398)).

         10.11      --     Supplemental Agreement, dated April 8, 1994, relating to the Consultant Agreement
                           referred to in Exhibit 10.5 (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.12      --     Management Agreement, dated April 25, 1990, among BCCL, BCL, US WEST Holdings and
                           Comcast Cablevision of Birmingham Inc. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.13      --     Assignment and Amendment Agreement, dated August 5, 1992, relating to the
                           Management Agreement referred to in Exhibit 10.7 (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.14      --     Consultant Agreement, dated August 16, 1989, between Cable London plc and U S WEST
                           Cable Communications Limited. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.15      --     Consultant Agreement for Technical Assistance, dated July 15, 1992, among Cable
                           Corporation, Windsor Television Limited, Middlesex Cable Limited and Telewest CGL.
                           (Incorporated by reference to Old Telewest's Registration Statement on Form S-1
                           filed with the Securities and Exchange Commission on April 29, 1994, as amended
                           (Registration No. 33-78398)).

         10.16      --     Cable Affiliation Agreement, dated December 14, 1993, between Cable Programme
                           Partners - Limited Partnership, Telewest CGL and other parties signatory thereto.
                           (Incorporated by reference to Old Telewest's Registration Statement on Form S-1
                           filed with the Securities and Exchange Commission on April 29, 1994, as amended
                           (Registration No. 33-78398)).

         10.17      --     Agreement, dated October 1, 1993, among Alan Stewart MacDonald Robinson, Jack
                           Forrest Gill, Raman Subba Row Limited and TUCCI. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).


                                       60
<PAGE>
         10.18      --     Co-ownership Agreement, dated March 12, 1990, between U S WEST Holdings and
                           Comcast Cablevision of Birmingham, Inc. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.19      --     Letter, dated April 29, 1992, relating to the Co-ownership Agreement referred to
                           in Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration
                           Statement on Form S-1 filed with the Securities and Exchange Commission on April
                           29, 1994, as amended (Registration No. 33-78398)).

         10.20      --     Letter, dated November 27, 1992, relating to the Co-ownership Agreement referred
                           to in Exhibit 10.13.  (Incorporated by reference to Old Telewest's Registration
                           Statement on Form S-1 filed with the Securities and Exchange Commission on April
                           29, 1994, as amended (Registration No. 33-78398)).

         10.21      --     Agreement to License and Provide Consulting Services, effective as of November 22,
                           1994, between Old Telewest and an affiliate of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.22      --     Agreement, dated December 4, 1987, between United Cable Television Corporation on
                           behalf of itself and United Artists Communications, Inc. and Trans-Global (U.K.)
                           Limited. (Incorporated by reference to Old Telewest's Registration Statement on
                           Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
                           amended (Registration No. 33-78398)).

         10.23      --     Agreement to License and Provide Consulting Services, effective as of November 22,
                           1994, between Old Telewest and TCI. (Incorporated by reference to Old Telewest's
                           1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1995).

         10.24      --     Novation Agreement relating to Birmingham Cable, dated November 21, 1994, among
                           General Cable, TUCCI, U S WEST Holding and other parties signatory thereto.
                           (Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on March 31, 1995).

         10.25      --     Subscription and Shareholders Agreement, dated January 30, 1995, among Videotron
                           Corporation Limited, United Artists Communications (London South) Limited, Cable
                           London, Elt Acquisition Company Limited, Nynex CableComms Limited, Cable
                           Corporation, London Interconnect Limited, Independent Cable Sales Limited, London
                           Interconnect PPV Limited and London Interconnect Limited. (Incorporated by
                           reference to the Company's Registration Statement on Form 8-B filed with the
                           Securities and Exchange Commission on September 22, 1995, as amended).


                                       61
<PAGE>
         10.26      --     Form of BT Interconnect Agreement, a copy of which was executed by BT and various
                           of the Company's affiliated entities.  (Incorporated by reference to the Company's
                           1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1997)

         10.27      --     Interconnection Agreement, dated July 15, 1994, between Mercury and United Artists
                           Communications (Scotland) Limited. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)). **

         10.28      --     Mercury Marketing and Operations Agreement, dated August 10, 1993, between
                           Telewest CGL and Mercury. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)). **

         10.29      --     Letter Agreement, dated August 23, 1995, between SBCC and Mercury. (Incorporated
                           by reference to the Company's Registration Statement on Form 8-B filed with the
                           Securities and Exchange Commission on September 22, 1995, as amended). ***

         10.30      --     Programming Agreement, dated June 30, 1995, among British Sky Broadcasting
                           Limited, British Sky Broadcasting Group plc and Old Telewest. (Incorporated by
                           reference to Old Telewest's Quarterly Report on Form 10-Q for the six months ended
                           June 30, 1995).***

         10.31      --    General Purchasing Agreement, dated March 1, 1993, among Telewest CGL, various
                          entities related to Telewest CGL, and Northern Telecom Europe Limited (the "General
                          Purchasing Agreement").  (Incorporated by reference to Old Telewest's Registration
                          Statement on Form S-1 filed with the Securities and Exchange Commission on April
                          29, 1994, as amended (Registration No. 33-78398)).**

         10.32      --     Purchase Agreement, dated August 27, 1993, between Southwestern Bell International
                           Holdings and GPT Limited. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.33      --     Network Services Center Agreement, dated May 16, 1994, among Telewest CGL, BCCL,
                           Cable London, and certain other signatories thereto. (Incorporated by reference to
                           Old Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).



                                       62
<PAGE>
         10.34      --     The Old Telewest Restricted Share Scheme. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.35      --     The Telewest 1995 Restricted Share Scheme. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.36      --     The Old Telewest Sharesave Scheme. (Incorporated by reference to Old Telewest's
                           1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1995).

         10.37      --     The Telewest 1995 Sharesave Scheme. (Incorporated by reference to the Company's
                           Registration Statement on Form 8-B filed with the Securities and Exchange
                           Commission on September 22, 1995, as amended).

         10.38      --     The Old Telewest Executive Share Option Scheme No. 1. (Incorporated by reference
                           to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on March 31, 1995).

         10.39      --     The Telewest 1995 Executive Share Option Scheme No. 1. (Incorporated by reference
                           to the Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.40      --     The Old Telewest Executive Share Option Scheme No. 2. (Incorporated by reference
                           to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on March 31, 1995).

         10.41       --    The Telewest 1995 Executive Share Option Scheme No. 2. (Incorporated by reference
                           to the Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.42       --    The Old Telewest Share Participation Scheme. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.43      --     The Telewest 1995 Share Participation Scheme. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).


                                       63
<PAGE>
         10.44      --     Executive Secondment Agreement, dated November 21, 1994, between
                           U S WEST Overseas and Telewest CGL (identical agreements were entered into between
                           an affiliate of TCI and Telewest CGL). (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.45      --     Form of Executive Secondment Agreement, dated August 10, 1995, between the Company
                           and the SBC Affiliates. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.46      --     Form of Executive Secondment Agreement, dated August 10, 1995, between the Company
                           and the Cox Affiliate. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.49      --     Employment Agreement, dated November 21, 1994, between Stephen J. Davidson and
                           Telewest CGL. (Incorporated by reference to Old Telewest's 1994 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on March 31, 1995).

         10.53      --     Employment Agreement, dated March 7, 1996, between Roger Wilson and Telewest CGL.
                           (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on April 1, 1996).

         10.54      --     Employment Agreement, dated February 16, 1996, between Bruce Langham and the
                           Telewest CGL. (Incorporated by reference to the Company's 1996 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on March 28, 1997).
                           Add Charles Burdick and Von Valkenburg.

         10.55      --     Letter Agreement, dated September 30, 1996, between Bruce Langham and Telewest
                           CGL.  (Incorporated by reference to the Company's 1996 Annual Report on Form 10-K
                           filed with the Securities and Exchange Commission on March 28, 1997).

         10.56      --     Non-Executive Directors Appointment Letter, dated August 1, 1995 between the
                           Company and Anthony W.P. Stenham.  (Incorporated by reference to the Company's
                           1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 28, 1997).

         10.57      --     Non-Executive Directors Appointment Letter, dated August 1, 1995 between the
                           Company and Sir Gordon Borrie QC. (Incorporated by reference to the Company's 1996
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           March 28, 1997).


                                       64
<PAGE>
         10.58      --     Non-Executive Directors Appointment Letter, dated August 1, 1995, between the
                           Company and Lord Griffiths of Fforestfach.  (Incorporated by reference to the
                           Company's 1996 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 28, 1997).

         10.59      --     Loan Agreement, by and among Telewest Communications Networks Limited, as
                           borrower, The Bank of New York, CIBC Wood Gundy plc, Chase Investment Bank
                           Limited, NatWest Markets and The Toronto-Dominion Bank, as arrangers, and CIBC
                           Wood Gundy plc, as agent and security trustee, dated as of May 22, 1996, as
                           amended pursuant to an Amendment Agreement, dated as of May 31, 1996 and a Second
                           Amendment Agreement, dated as of August 2, 1996.  (Incorporated by reference to
                           the Company's Quarterly Report on Form 10-Q for the six months ended June 30,
                           1996).

         10.60      --     Amendments number 1 through 9 to the General Purchasing Agreement filed as Exhibit
                           10.31.*+

         10.61      --     Employment Agreement, dated August 7, 1997, between Charles Burdick and Telewest
                           CGL.*

         13         --     The Company's 1997 Annual Report to Shareholders (only those portions of the
                           Company's 1997 Annual Report specifically incorporated by reference herein shall
                           be deemed filed by the Company herewith). *

         21         --     List of Subsidiaries of the Company.  (Incorporated by reference to the Company's
                           1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 28, 1997).

         27         --     Financial Data Schedule. *

         99         --     Only those portions of the Company's 1998 Proxy Statement expressly incorporated
                           by reference herein shall be deemed filed by the Company herewith.*

</TABLE>

---------------------------

*          Filed herewith

**         Portions of this agreement have been accorded confidential treatment
           by the Securities and Exchange Commission pursuant to Rule 406 of the
           Securities Act of 1933, as amended.

***        Portions of this agreement have been accorded confidential treatment
           by the Securities and Exchange Commission pursuant to Rule 24b-2 of
           the Securities Exchange Act of 1934, as amended.

+          An application has been filed with the Securities and Exchange
           Commission requesting confidential treatment for certain portions of
           these Amendments.

                                       65
<PAGE>
(b)      Reports on Form 8-K.

         None.






                                       66
<PAGE>
                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                       Telewest Communications plc

                                       By: /s/Stephen J. Davidson
                                           ----------------------------------
                                       Name: Stephen J. Davidson
                                       Title: Chief Executive Officer


                                POWER OF ATTORNEY

       KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Stephen J. Davidson and Charles Burdick,
and each of them, his true and lawful attorney-in-fact and agent with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign this report and any and all amendments to this
report, and to file the same with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

       Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:


Signature                            Title                        Date
---------                            -----                        ----

/s/ A. Gary Ames                    Director                  March 31, 1998
----------------------------------
A. Gary Ames


                                    Director
----------------------------------
Lord Borrie

                                    Director
----------------------------------
David Evans


                                       67
<PAGE>
Signature                            Title                        Date
---------                            -----                        ----

/s/ Lord Griffiths of Fforestfach   Director                 March 31, 1998
----------------------------------
Lord Griffiths of Fforestfach


                                    Director
----------------------------------
Charles M. Lillis


/s/ James O. Robbins                Director                 March 31, 1998
----------------------------------
James O. Robbins


/s/ Rober Shaner                    Director                 March 31, 1998
----------------------------------
Robert Shaner


                                    Director
----------------------------------
Anthony W. P. Stenham


/s/ David Van Valkenburg            Director                 March 31, 1998
----------------------------------
David Van Valkenburg


                                    Director
----------------------------------
Fred A. Vierra


/s/ Stephen J. Davidson             Director and Chief       March 31, 1998
----------------------------------  Executive Officer
Stephen J. Davidson                 (Principal Executive
                                    Officer)


/s/Charles Burdick                  Director and Group       March 31, 1998
----------------------------------  Finance Director
Charles Burdick                     (Principal Financial
                                    and Accounting Officer)



                                       68
<PAGE>
                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
   Exhibit Number
<S>                       <C>
         3.1        --     Memorandum of Association of the Company. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B, filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         3.2        --     Articles of Association of the Company. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B, filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         4.1        --     Amended and Restated Deposit Agreement, dated as of November 30, 1994 (as amended
                           as of October 2, 1995), among the Company, The Bank of New York, as Depositary,
                           and the holders from time to time of American Depositary Receipts issued
                           thereunder.  (Incorporated by reference to the Company's 1995 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on April 1, 1996).

         4.2        --     Form of American Depositary Receipt (included in Exhibit 4.1).

         4.3        --     Senior Debenture Indenture, dated as of October 3, 1995, between the Company and
                           The Bank of New York, as Trustee. (Incorporated by reference to the Company's 1995
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           April 1, 1996).

         4.4        --     Senior Discount Debenture Indenture, dated as of October 3, 1995,  between the
                           Company and The Bank of New York, as Trustee. (Incorporated by reference to the
                           Company's 1995 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on April 1, 1996).

         4.5        --     Form of Senior Debenture (included in Exhibit 4.3).

         4.6        --     Form of Senior Discount Debenture (included in Exhibit 4.4).

         4.7        --     Deposit Agreement, dated as of October 3, 1995, between the Company and The Bank
                           of New York, as Book-Entry Depositary. (Incorporated by reference to the Company's
                           1995 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on April 1, 1996).

<PAGE>
         10.1       --     Relationship Agreement, dated as of November 22, 1994, by and among Old Telewest,
                           certain subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.2       --     Shareholders Agreement, entered into as of November 22, 1994, between certain
                           subsidiaries of TCI and certain subsidiaries of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.3       --     Registration Rights Agreement, dated October 3, 1995, among the Company, the TCI
                           Affiliate, the U S WEST Affiliates, the SBC Affiliates and the Cox Affiliate.
                           (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on April 1, 1996).

         10.4       --     Co-Operation Agreement, dated October 3, 1995, between the SBC Affiliates and the
                           Cox Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on April 1, 1996).

         10.5       --     Share Dealing Agreement, dated October 3, 1995, among the TCI Affiliate, the U S
                           WEST Affiliates, the Company and the SBC Affiliates. (Incorporated by reference to
                           the Company's 1995 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on April 1, 1996).

         10.6       --     Tax Deed, dated November 22, 1994, between TCI International Holdings, Inc., U S
                           WEST Holdings and Old Telewest. (Incorporated by reference to Old Telewest's 1994
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           March 31, 1995).

         10.7       --     Trademark License Agreement, effective as of November 22, 1994, between Old
                           Telewest and U S WEST.  (Incorporated by reference to Old Telewest's 1994 Annual
                           Report on Form 10-K filed with the Securities and Exchange Commission on March 31,
                           1995).

         10.8       --     Tradename Agreement, effective as of November 22, 1994, between Old Telewest, TCI
                           and TCI/U S WEST Cable Communications Group. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.9       --     Tax Deed, dated October 3, 1995, among the Company, the SBC Affiliates and the Cox
                           Affiliate. (Incorporated by reference to the Company's 1995 Annual Report on Form
                           10-K filed with the Securities and Exchange Commission on April 1, 1996).


<PAGE>
         10.10      --     Consultant Agreement for Operational Assistance, dated July 17, 1992, among
                           Birmingham Cable Corporation Limited ("BCCL"), Birmingham Cable Limited ("BCL")
                           and Telewest Communications Group Limited ("Telewest CGL"). (Incorporated by
                           reference to Old Telewest's Registration Statement on Form S-1 filed with the
                           Securities and Exchange Commission on April 29, 1994, as amended (Registration No.
                           33-78398)).

         10.11      --     Supplemental Agreement, dated April 8, 1994, relating to the Consultant Agreement
                           referred to in Exhibit 10.5 (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.12      --     Management Agreement, dated April 25, 1990, among BCCL, BCL, US WEST Holdings and
                           Comcast Cablevision of Birmingham Inc. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.13      --     Assignment and Amendment Agreement, dated August 5, 1992, relating to the
                           Management Agreement referred to in Exhibit 10.7 (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.14      --     Consultant Agreement, dated August 16, 1989, between Cable London plc and U S WEST
                           Cable Communications Limited. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.15      --     Consultant Agreement for Technical Assistance, dated July 15, 1992, among Cable
                           Corporation, Windsor Television Limited, Middlesex Cable Limited and Telewest CGL.
                           (Incorporated by reference to Old Telewest's Registration Statement on Form S-1
                           filed with the Securities and Exchange Commission on April 29, 1994, as amended
                           (Registration No. 33-78398)).

         10.16      --     Cable Affiliation Agreement, dated December 14, 1993, between Cable Programme
                           Partners - Limited Partnership, Telewest CGL and other parties signatory thereto.
                           (Incorporated by reference to Old Telewest's Registration Statement on Form S-1
                           filed with the Securities and Exchange Commission on April 29, 1994, as amended
                           (Registration No. 33-78398)).

         10.17      --     Agreement, dated October 1, 1993, among Alan Stewart MacDonald Robinson, Jack
                           Forrest Gill, Raman Subba Row Limited and TUCCI. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).


<PAGE>
         10.18      --     Co-ownership Agreement, dated March 12, 1990, between U S WEST Holdings and
                           Comcast Cablevision of Birmingham, Inc. (Incorporated by reference to Old
                           Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).

         10.19      --     Letter, dated April 29, 1992, relating to the Co-ownership Agreement referred to
                           in Exhibit 10.13. (Incorporated by reference to Old Telewest's Registration
                           Statement on Form S-1 filed with the Securities and Exchange Commission on April
                           29, 1994, as amended (Registration No. 33-78398)).

         10.20      --     Letter, dated November 27, 1992, relating to the Co-ownership Agreement referred
                           to in Exhibit 10.13.  (Incorporated by reference to Old Telewest's Registration
                           Statement on Form S-1 filed with the Securities and Exchange Commission on April
                           29, 1994, as amended (Registration No. 33-78398)).

         10.21      --     Agreement to License and Provide Consulting Services, effective as of November 22,
                           1994, between Old Telewest and an affiliate of U S WEST. (Incorporated by
                           reference to Old Telewest's 1994 Annual Report on Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995).

         10.22      --     Agreement, dated December 4, 1987, between United Cable Television Corporation on
                           behalf of itself and United Artists Communications, Inc. and Trans-Global (U.K.)
                           Limited. (Incorporated by reference to Old Telewest's Registration Statement on
                           Form S-1 filed with the Securities and Exchange Commission on April 29, 1994, as
                           amended (Registration No. 33-78398)).

         10.23      --     Agreement to License and Provide Consulting Services, effective as of November 22,
                           1994, between Old Telewest and TCI. (Incorporated by reference to Old Telewest's
                           1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1995).

         10.24      --     Novation Agreement relating to Birmingham Cable, dated November 21, 1994, among
                           General Cable, TUCCI, U S WEST Holding and other parties signatory thereto.
                           (Incorporated by reference to Old Telewest's 1994 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on March 31, 1995).

         10.25      --     Subscription and Shareholders Agreement, dated January 30, 1995, among Videotron
                           Corporation Limited, United Artists Communications (London South) Limited, Cable
                           London, Elt Acquisition Company Limited, Nynex CableComms Limited, Cable
                           Corporation, London Interconnect Limited, Independent Cable Sales Limited, London
                           Interconnect PPV Limited and London Interconnect Limited. (Incorporated by
                           reference to the Company's Registration Statement on Form 8-B filed with the
                           Securities and Exchange Commission on September 22, 1995, as amended).


<PAGE>
         10.26      --     Form of BT Interconnect Agreement, a copy of which was executed by BT and various
                           of the Company's affiliated entities.  (Incorporated by reference to the Company's
                           1997 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1997)

         10.27      --     Interconnection Agreement, dated July 15, 1994, between Mercury and United Artists
                           Communications (Scotland) Limited. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)). **

         10.28      --     Mercury Marketing and Operations Agreement, dated August 10, 1993, between
                           Telewest CGL and Mercury. (Incorporated by reference to Old Telewest's
                           Registration Statement on Form S-1 filed with the Securities and Exchange
                           Commission on April 29, 1994, as amended (Registration No. 33-78398)). **

         10.29      --     Letter Agreement, dated August 23, 1995, between SBCC and Mercury. (Incorporated
                           by reference to the Company's Registration Statement on Form 8-B filed with the
                           Securities and Exchange Commission on September 22, 1995, as amended). ***

         10.30      --     Programming Agreement, dated June 30, 1995, among British Sky Broadcasting
                           Limited, British Sky Broadcasting Group plc and Old Telewest. (Incorporated by
                           reference to Old Telewest's Quarterly Report on Form 10-Q for the six months ended
                           June 30, 1995).***

         10.31      --     General Purchasing Agreement, dated March 1, 1993, among Telewest CGL, various
                           entities related to Telewest CGL, and Northern Telecom Europe Limited (the "General
                           Purchasing Agreement").  (Incorporated by reference to Old Telewest's Registration
                           Statement on Form S-1 filed with the Securities and Exchange Commission on April
                           29, 1994, as amended (Registration No. 33-78398)).**

         10.32      --     Purchase Agreement, dated August 27, 1993, between Southwestern Bell International
                           Holdings and GPT Limited. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.33      --     Network Services Center Agreement, dated May 16, 1994, among Telewest CGL, BCCL,
                           Cable London, and certain other signatories thereto. (Incorporated by reference to
                           Old Telewest's Registration Statement on Form S-1 filed with the Securities and
                           Exchange Commission on April 29, 1994, as amended (Registration No. 33-78398)).


<PAGE>
         10.34      --     The Old Telewest Restricted Share Scheme. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.35      --     The Telewest 1995 Restricted Share Scheme. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.36      --     The Old Telewest Sharesave Scheme. (Incorporated by reference to Old Telewest's
                           1994 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 31, 1995).

         10.37      --     The Telewest 1995 Sharesave Scheme. (Incorporated by reference to the Company's
                           Registration Statement on Form 8-B filed with the Securities and Exchange
                           Commission on September 22, 1995, as amended).

         10.38      --     The Old Telewest Executive Share Option Scheme No. 1. (Incorporated by reference
                           to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on March 31, 1995).

         10.39      --     The Telewest 1995 Executive Share Option Scheme No. 1. (Incorporated by reference
                           to the Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.40      --     The Old Telewest Executive Share Option Scheme No. 2. (Incorporated by reference
                           to Old Telewest's 1994 Annual Report on Form 10-K filed with the Securities and
                           Exchange Commission on March 31, 1995).

         10.41       --    The Telewest 1995 Executive Share Option Scheme No. 2. (Incorporated by reference
                           to the Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).

         10.42       --    The Old Telewest Share Participation Scheme. (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.43      --     The Telewest 1995 Share Participation Scheme. (Incorporated by reference to the
                           Company's Registration Statement on Form 8-B filed with the Securities and
                           Exchange Commission on September 22, 1995, as amended).


<PAGE>
         10.44      --     Executive Secondment Agreement, dated November 21, 1994, between
                           U S WEST Overseas and Telewest CGL (identical agreements were entered into between
                           an affiliate of TCI and Telewest CGL). (Incorporated by reference to Old
                           Telewest's 1994 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 31, 1995).

         10.45      --     Form of Executive Secondment Agreement, dated August 10, 1995, between the Company
                           and the SBC Affiliates. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.46      --     Form of Executive Secondment Agreement, dated August 10, 1995, between the Company
                           and the Cox Affiliate. (Incorporated by reference to the Company's Registration
                           Statement on Form 8-B filed with the Securities and Exchange Commission on
                           September 22, 1995, as amended).

         10.49      --     Employment Agreement, dated November 21, 1994, between Stephen J. Davidson and
                           Telewest CGL. (Incorporated by reference to Old Telewest's 1994 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on March 31, 1995).

         10.53      --     Employment Agreement, dated March 7, 1996, between Roger Wilson and Telewest CGL.
                           (Incorporated by reference to the Company's 1995 Annual Report on Form 10-K filed
                           with the Securities and Exchange Commission on April 1, 1996).

         10.54      --     Employment Agreement, dated February 16, 1996, between Bruce Langham and the
                           Telewest CGL. (Incorporated by reference to the Company's 1996 Annual Report on
                           Form 10-K filed with the Securities and Exchange Commission on March 28, 1997).
                           Add Charles Burdick and Von Valkenburg.

         10.55      --     Letter Agreement, dated September 30, 1996, between Bruce Langham and Telewest
                           CGL.  (Incorporated by reference to the Company's 1996 Annual Report on Form 10-K
                           filed with the Securities and Exchange Commission on March 28, 1997).

         10.56      --     Non-Executive Directors Appointment Letter, dated August 1, 1995 between the
                           Company and Anthony W.P. Stenham.  (Incorporated by reference to the Company's
                           1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 28, 1997).

         10.57      --     Non-Executive Directors Appointment Letter, dated August 1, 1995 between the
                           Company and Sir Gordon Borrie QC. (Incorporated by reference to the Company's 1996
                           Annual Report on Form 10-K filed with the Securities and Exchange Commission on
                           March 28, 1997).


<PAGE>
         10.58      --     Non-Executive Directors Appointment Letter, dated August 1, 1995, between the
                           Company and Lord Griffiths of Fforestfach.  (Incorporated by reference to the
                           Company's 1996 Annual Report on Form 10-K filed with the Securities and Exchange
                           Commission on March 28, 1997).

         10.59      --     Loan Agreement, by and among Telewest Communications Networks Limited, as
                           borrower, The Bank of New York, CIBC Wood Gundy plc, Chase Investment Bank
                           Limited, NatWest Markets and The Toronto-Dominion Bank, as arrangers, and CIBC
                           Wood Gundy plc, as agent and security trustee, dated as of May 22, 1996, as
                           amended pursuant to an Amendment Agreement, dated as of May 31, 1996 and a Second
                           Amendment Agreement, dated as of August 2, 1996.  (Incorporated by reference to
                           the Company's Quarterly Report on Form 10-Q for the six months ended June 30,
                           1996).

         10.60      --     Amendments number 1 through 9 to the General Purchasing Agreement filed as Exhibit
                           10.31.*+

         10.61      --     Employment Agreement, dated August 7, 1997, between Charles Burdick and Telewest
                           CGL.*

         13         --     The Company's 1997 Annual Report to Shareholders (only those portions of the
                           Company's 1997 Annual Report specifically incorporated by reference herein shall
                           be deemed filed by the Company herewith). *

         21         --     List of Subsidiaries of the Company.  (Incorporated by reference to the Company's
                           1996 Annual Report on Form 10-K filed with the Securities and Exchange Commission
                           on March 28, 1997).

         27         --     Financial Data Schedule. *

         99         --     Only those portions of the Company's 1998 Proxy Statement expressly incorporated
                           by reference herein shall be deemed filed by the Company herewith.*

</TABLE>

---------------------------

*          Filed herewith

**         Portions of this agreement have been accorded confidential treatment
           by the Securities and Exchange Commission pursuant to Rule 406 of the
           Securities Act of 1933, as amended.

***        Portions of this agreement have been accorded confidential treatment
           by the Securities and Exchange Commission pursuant to Rule 24b-2 of
           the Securities Exchange Act of 1934, as amended.

+          An application has been filed with the Securities and Exchange
           Commission requesting confidential treatment for certain portions of
           these Amendments.