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Monday, 31 July, 2000, 10:58 GMT 11:58 UK
Thus losses up, shares down
Demon Internet web site
Demon Internet customers are defecting
Losses at telecoms company Thus have risen dramatically after its Demon Internet service was hit by rivals offering "free" access.

The firm unveiled operating losses of 18m for the first quarter of the financial year - up from 4.6m last year.

After Monday's announcement shares in Thus plunged by 27% in morning trade to a record low of 161p, dragging down shares in other telecoms firms.

The rapidly-expanding group - formerly known as Scottish Telecom - blamed current trading conditions and the impact of flat-rate internet services for the results.

Thus logo
Shares in Thus slumped
Thus said standard dial-up subscription revenues had fallen 13% at its Demon internet service provider (ISP) as retail customers defected to rivals offering "free" net access.

The company singled out British Telecommunication's SurfTime service, which offers consumers a flat-rate ISP with free calls at weekends and evenings.

"It is reducing our revenues because basically people are moving towards SurfTime's pricing structure," said a Thus spokeswoman.

But she declined to elaborate on how Demon might respond.

Thus, which is 50.1% owned by ScottishPower, reported a six per cent growth in turnover to 50.6m for the quarter ended on 30 June.

'Silver lining'

The loss before interest, tax and depreciation was 8.7m, compared to a positive figure of 1.7 m in 1999.

Chief executive Bill Allan said good growth in business revenues provided a silver lining for the first quarter.

"Despite a disappointing performance in consumer services and lower than expected headline growth, the business focus of the company shows good signs of progress with business revenues up by 24%," he said.

During the first quarter Thus increased its operational network by 210 kilometres to more than 5,400km.

Earlier this month it won a major contract to provide the network system that supports Sky's telephone offering Skytalk.

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