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Monday, April 12, 1999 Published at 19:24 GMT 20:24 UK


Business: The Company File

Dixons may float Freeserve

The most popular ISP in Britain

Dixons, the UK's leading electrical retailer, is considering floating its Freeserve Internet Service on the stock market.

It says it has appointed two banks to "explore the strategic alternatives available to enable Freeserve to realise its full potential and optimise the value of Freeserve for Dixons shareholders, including a potential intial public offering of a minority interest in Freeserve."

Freeserve, which offers a free Internet connection and content pages, has been a roaring success since it was launched in September. It has become the largest Internet service provider in the UK with more than 1 million subscribers. It has spawned a host of imitators, with banks, supermarkets, and even BT itself scrambling to offer free services.

Analysts say that Freeserve could be worth up to £2bn as a separate business. It would join a host of US Internet stocks which are still among the most highly valued on world stock markets.

Rival ISP America Online, with 15m subscribers, mainly in the United States, is valued at $140bn (£90bn).

"Today's announcement is not much of a surprise, in that Dixons has already alluded to the fact that the obvious way to crystallise value from Freeserve was not to sell the whole lot, but to float a bit of it," one stockbroker said.

Shares in Dixons, which have already performed strongly in recent months, soared another 114p to a record 1564p on the news.

Freeserve is expected to begin making money later this year, with its huge subcriber base boosting advertising revenues and telephone connection charges. Telecom operator Energis, which was floated off from the National Grid, and supplies the backbone to the network, is expected to benefit from any flotation, as would its content supplier, Planet Online.





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