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Tuesday, June 22, 1999 Published at 18:18 GMT 19:18 UK


Business: The Company File

What price Freeserve?

Freeserve has been a dream come true for Dixons, but can it last?

The debate over the value of Dixons' popular Internet service provider, Freeserve, has gathered pace with confirmation that marketing for the company's flotation will begin next week.

Dixons, which is expected to float a minority stake of about 20% of Freeserve next month, has seen its stock lift since it launched the Online service last September.

Future may not be so rosy

Freeserve quickly became established as the UK's leading access provider with 1.25m users. But concern over its future has been dampening early enthusiasm.


[ image: Freeserve's launch last year boosted Dixons' share price]
Freeserve's launch last year boosted Dixons' share price
On Monday, AOL Europe said it was thinking about offering a free Internet service in the UK to counter the runaway success of Freeserve and other rivals.

Microsoft Network recently decided to offer its services for free to UK customers.

And earlier this month, the BBC said it would be offering free Web access later in the summer, and many other groups - from retailers to football clubs - have also been quick to enter the fray.

There has been some scepticism about the flotation, because Freeserve is too new to have built up a convincing track record, and it is operating in a very volatile market.

Plucking figures out of the air

Investment analysts have put estimates of Freeserve's value between £1.3bn and £2.6bn ($2.08 to $4.16bn) - a huge range which is likely to exacerbate uncertainty in the market.

Also, reports quoting a source "close to the company" have said Freeserve made a "small loss" in its first seven months, and that it is unlikely to break even in its first full year of trading.

Dixons - the UK's largest electronics retailer - saw its share price rise on Tuesday - up 36 pence to 1208p, recovering much of the ground lost the previous day because of the AOL announcement.





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