British telecom giant Cable and Wireless has agreed to invest T30 million ($ 20 million) in the U.K. cable TV operations of BCE, formerly known as Bell Canada Enterprises.

This is one element of the deal announced Wednesday under which BCE will acquire 20% of the C&W subsidiary Mercury Communications for T480 million ($ 317 million).

The link between the British and Canadian telecom ventures follows C&W’s failure to secure similar deals with U.S. telcos AT&T and US West.

Nascent cable

Cable TV is still in its infancy in the United Kingdom, but systems are under construction in many towns and cities. Most of the main investors in U.K. cable come from the United States and Canada.

BCE is a 23% shareholder in the U.K. operations of Canadian cabler Videotron. Videotron U.K. is Britain’s largest cable operator, with more than 65,000 subscribers, mainly in London.

Unlike their U.S. counterparts, British cable TV operators are allowed to offer telephone services, by interconnecting their local wires with the long-distance lines of British Telecom or Mercury.

Cementing cable development

In practice, almost all cablers find themselves dealing with Mercury rather than BT, which has not been keen to encourage the cable telephone business. The deal between C&W and BCE further cements Mercury’s close involvement with the development of cable in Britain.

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