UBS Warburg sees no light at the end of the tunnel for Matav Cable Systems Media (Nasdaq:MATV), according to its research update from December 3.

Analyst Stephen Levey is cool on the Israeli cable TV company until it can clear up its financing issues. He affirmed a Hold rating for the company and lowered its price target from $20 to $16.

Its third-quarter results disappointed and deeper losses can be expected when the company gets into high-speed Internet from the second quarter of 2002, writes Levey.

Israel's banks will have no choice but to lend the bleeding company more money, but they'll up their interest rates, Levey predicts. The alternative would be to persuade shareholders to invest more money, or to find new backers.

Although Levey reduced revenue expectations for 2002, in the long run Israel's cable companies could do well, he notes. Tiering should boost average revenue per user ¿ ARPU ¿ to the low $40 range, and fast-Internet service should begin to provide income. But this happy scenario, which also includes Matav finally reducing its debt, is no closer than 12 to 18 months at best, he warns.

UBS estimates 2002 revenue of $115 million, from $124 million, because of special offers to users for tiering. The company is spending more than expected and, as said above, will have to pay higher interest rates. The bank expects losses of $36 million next year, up from an earlier forecast of $25 million losses.