Chello, the Dutch broadband Internet group, has delayed its proposed flotation until at least next week while it enters into "strategic discussions" with UK cable operator Telewest, according to the UK's Financial Times.

Chello is reportedly in talks with Telewest about a deal that would give the company a stronghold in the UK. Telewest could in turn buy a stake in Chello. Neither company has commented on the Telewest speculation, although Chello did rule out another rumour that it was in takeover talks with failed fashion e-tailer

It is not clear whether such a deal with Telewest would spice up the prospects for a subsequent flotation of Chello, or remove the necessity for a stockmarket quote.

The delay was announced at a time when investors had expressed concerns about the low value attributed to Chello and queried the chances of success of the flotation.

Chello is majority owned by Dutch cable giant UPC, which recently halted its planned merger with pan-European broadcaster SBS Broadcasting when its tumbling share price reduced the viability of the deal. Chello had some 180,000 subscribers at the end of March and is reported to be adding new customers at the rate of 3,000-5,000 a week.

Telewest shares at 270p are today up 9% on their overnight close. UPC shares were up 11% at $28 1/8.