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Freeserve regains footing
By Bloomberg News
Special to CNET News.com
January 6, 2000, 10:20 a.m. PT
LONDON--Freeserve, the United Kingdom's largest Internet service, attracted a similar number of users in the second quarter as the first, stemming a slide in customer growth.
The free Internet service attracted 14,000 users per week in the 12 weeks ending Nov. 13, the same as the previous three months, for a total of 1.58 million accounts. In the period before that, comparative growth had halved.
With 250 companies offering Internet access for free, Freeserve is trying to retain its one-third share of Britain's Internet access market, set to be worth $1.9 billion by 2003. The unprofitable company is also trying to increase revenue from e-commerce and advertising, which was less than the revenue from its share of local phone calls.
"Freeserve's market value when compared with the number of unique visitors to its site puts it at par with AOL and Yahoo," said Miles Saltiel, an analyst at WestLB Panmure. America Online is the world's largest Internet service, and Yahoo is the top Web navigation company.
Freeserve sales reached 3.8 million pounds ($6.25 million) from 3.4 million ($5.6 million) in the previous quarter.
"In the second half of this year, we aim to extend our market leadership further, continuing to use a strong access proposition to drive traffic to our portal sites, which then reap the rewards of advertising and e-commerce," said chief executive John Pluthero.
Freeserve said e-commerce and advertising generated 1.85 million pounds ($3.04 million) in revenue, or 49 percent of total sales. Telephone charges brought in 1.93 million pounds ($3.17 million).
In the previous quarter, the 1.76 million pounds ($2.9 million) in revenue from e-commerce and advertising exceeded the 1.6 million pounds ($2.63 million) gained from telephone dial-ups.
"The reversal was a one-off as we began to get a bigger share of telephone revenue from Energis since August," said Pluthero. The company planned acquisitions of smaller access providers to add users, Web sites to add content, and other companies to improve its technology.
It had cash of about 85 million pounds ($140 million) left over from its share sale in July, when it raised 135 million pounds ($222 million) by selling 90 million new shares at 150 pence each.
The company posted a loss before exceptional items of 3.6 million pounds ($5.9 million), compared with a loss of 5 million pounds ($8.2 million) in the previous 16 weeks.
"At the current rate of spending, it can sustain itself for about seven and a half quarters," said Saltiel.
The average number of users leaving Freeserve after signing on, or the monthly churn rate, fell to 7.7 percent from 9.5 percent in the previous quarter. Users were attracted to new content and features, such as content tailored to women, an auction service and a credit card facility.
The number of page impressions per month increased to 110 million in November, 44 percent more than in August. Minutes of usage per day, however, increased 14 percent to 1.9 billion minutes for the quarter.
Trading goods and services online in the United Kingdom will expand to $13 billion by 2001 from $260 million last year, according to Forrester Research. Freeserve is 80 percent owned by Dixons Group, the United Kingdom's largest electronics retailer, which also owns Currys, PC World and the Link retail chains.
Copyright 2000, Bloomberg L.P. All Rights Reserved. |
