NTL today fell victim to Britain's increasingly competitive high-speed internet market, reporting a slump in new broadband subscriptions and a net loss of customers that is expected to continue.

The Nasdaq-listed group, which operates the newly merged ntl:Telewest cable business and is the UK's second largest internet provider, said net new broadband subscriptions fell by nearly half in the three months to June 105,000 from 191,400 in the previous three months.

Across NTL's cable TV, internet and telephone business, the company lost a net 18,900 customers in the second quarter, reversing net gains of 25,800 in the first quarter and 62,500 for the same period a year ago.

Disconnections in old NTL areas failed to make up for net additions in old Telewest areas, it said.

The company said: "We expect this to occur again in the third quarter due to the credit policy changes we made at old NTL."

The broadband news follows similarly grim figures from BT. The market leader said last month that net new retail broadband customers dropped from an average of 250,000 in previous quarters to just 158,000 in the second quarter.

Established broadband players are feeling the heat after a group of new entrants led by Carphone Warehouse started offering packages of services including "free broadband" earlier this year.

BSkyB, the satellite broadcaster 38 per cent owned by News Corporation, the parent company of Times Online, and Orange, the mobile group owned by France Telecom, have both since unveiled similar "free" deals.

NTL plans to compete by offering a four-part package of services including landline calls, mobile, television and broadband. The bundles will be marketed under the Virgin brand after NTL's £960 million acquisition of the Virgin Mobile in April.

The group said today it expects to compete through "our aggressive and ambitious move into the quad-play arena".

The comments came as NTL issued results for the first full quarter since the completion of its $6 billion acquisition of Telewest Global in March. The combined group posted revenues of £884.3 million for the three months to June up from £611.4 million in the January-March quarter.

Operating profit rose from £3.9 million to £6.3 million.

The company said it had achieved £15 million of cost savings during the quarter, putting it on track to achieve the annualised £250-million cost savings by the end of 2007.

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