FREESERVE for a 45% premium, bodes well for cybersurf
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Freeserve set for 45% premium
Patrick Hosking, Evening Standard
16 July 1999
nternet euphoria is set to send shares in Freeserve,
the Dixonsowned web-access business, to a massive
45% premium, according to a grey-market price
quoted today.
Spread-betting bookies IG Index
are quoting a spread of 202p to
209p for the closing price on 2
August, the first day of dealing.
Bookies City Index were
meanwhile quoting a 195p-201p
spread. That compares with an
indicative offer price of 130p to
150p.
The 114,000 small investors who
regis-tered an interest in the £1.4
billion float look set to make substantial profits even at
the very top of the range.
However, Freeserve is losing more than 4000 registered
users a day, according to an analysis of fine print in the
prospectus*. For every five new users who sign up,
three desert. More than 826,000 users have left since
the September launch and the figure is running at well
over 100,000 a month.
This so-called 'churn rate' is under intense scrutiny as
analysts worry that there is nothing to stop users
defecting to rival free services.
A spokesman said the lost users were not necessarily
deserting: they could be temporarily absent because of
the warm weather or on holiday.
BT, Virgin, WH Smith, Tesco and - as of yesterday,
Manchester United - are among dozens of rival free
service providers. Tiny Computers has raised the stakes
further by offering free PCs and Internet access to
people subscribing to a new phone network.
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©1999 Associated New Media. All rights reserved.
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