Rumours were rife last night that two major UK cable operators were manoeuvering into position for a merger.

Telewest and ntl, both strongly based in the North-East, are digging themselves out of separate financial crises.

But business experts feel they will join forces once they are in a stronger position.

Telewest boosted speculation by announcing yesterday that it had secured a £2.2bn bank loan to help with its restructuring plans.

The lifeline will allow the Woking group to stay in business while it thrashes out the terms of a debt-for-equity swap.

It comes only days after UK rival ntl set out on a "new beginning" after successfully emerging from Chapter 11 bankruptcy protection.

One insider said last night: "There is no secret that they have considered a merger in the past. They both need to get their houses in order before anything can happen, but it would make good sense for them to team up."

A spokeswoman at ntl's Teesside base said: "Speculation regarding Telewest and ntl began many years ago and continues today. Our company policy is not to comment on rumour and speculation."

Telewest has been in talks with bondholders to discuss ways of slashing its £3.5bn debt mountain since the autumn.

Shareholders are expected to be left with only three per cent of the group's equity when the debt-for-equity swap takes place.

Charles Burdick, who took over as managing director in July, said he had "no further progress" on when this was likely.

But he added: "This agreement with our banks is another important step forward in our balance sheet restructuring process."

The group said all its senior lenders had agreed to the £2.16bn bank loan, the bulk of which matures in 2005.

Telewest, like ntl, ran up massive debts by spending billions on a rapid expansion drive - its network now covers nearly five million homes.

Ntl completed its financial overhaul at the weekend when lenders agreed to swap £6.8bn in debt for shares and bonds.