[Demon: U.K. ISP]
from totaltele.com... another QWST acquisition?
mark
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UK ISP Bid-Whispers Link Top US and European Telcos With Demon
By Vanessa Clark
06-APR-98
Demon Internet, the UK's biggest consumer oriented Internet Service provider, is at the center of intensifying bid speculation, fueling expectations that a shakeout of Europe's ISP sector is imminent.
Last week the shares of both British Telecom and Scottish Telecom both spiked on bid speculation.
In subsequent reports Demon has also been linked with France Telecom, Orange plc, a UK mobile operator, the Dutch operator, KPN and Norweb, the UK electricity supplier that plans to offer Internet access over power lines. Although Demon has refused to comment, London marker analysts say an announcement may come this week.
Demon has been the subject of bid rumors for over a year, and is considered one of the prime targets in the UK market where it claims to have 175,000 subscribers, and is valued at $65 million by Durlacher Ltd., a London stock broker that specializes in Internet market analysis.
BT described its connection with the independent ISP as "pure speculation and rumor", but experts believe Demon could give a valuable filip to BT Internet, which has struggled to achieve dominant standing in the UK. Nick Gibson, an analyst with Durlacher, said the company could also be a valuable source of network traffic for the UK telco, which has the most to lose from the routing of Internet traffic via alternative networks.
Other experts have linked Demon with Orange, one of the UK's three mobile operators, all of whom are known to be targetting Internet access as a means of growing network traffic. Whilst still others see Demon as an affordable stepping stone to the Uk market for a foreign operator.
Likely overseas suitors of Demon are thought to include France Telecom, Deutsch Telekom, or Qwest. The two European telcos last week announced bullish plans to invade the UK communications market via alliance with the local long-distance player, Energis, which will build to build a series of UK metropolitan area networks under the brand of MetroHoldings Ltd. A week earlier Qwest, the US-based carrier which is pushing Internet telephony services over a state-of-the-art fiber network, paid $153 million for EUnet International.
EUnet will act as a European bridgehead for Qwest, and brings with its points of presence across the continent from Russia to Portugal. However, at the time of the acquisition's announcement, EUnet's marketing director, Johan Helsingius admitted that the UK still represented a gap in the company's European network but said: "we are working to correct it."
Whatever the motivation of any buyer of Demon, or any other UK or European ISP, analysts agree that few will be able to fend of suitors for long. Small to medium-sized ISPs are seeing demand grow at 105 to 15% per month, said John Matthews, a principal consultant with Ovum, London. "They don't have the resources to keep up with this growth" he said, pointing out that the revenues generated via simple Internet access services are out of balance with the investment need to build the infrastructure to support them. |
