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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Tom Tallant who wrote (22458)	6/15/1999 7:49:00 PM
From: Glenn D. Rudolph	Respond to of 41369

LONDON, June 15 (Reuters) - Freeserve, the UK's leading Internet service provider owned by Dixons Group Plc <DXNS.L>, aims to float next month, via a dual listing in London and on Nasdaq in the United States, industry analysts familiar with the company said on Tuesday. Dixons, Britain's biggest electrical retailer, had announced plans last week to sell a minority interest in its Internet business, which has grown rapidly on the back of its subscription-free access to the Net. Freeserve, with around 1.3 million active subscribers, has been valued between just under one billion pounds ($1.60 billion) and two billion pounds. The analysts said they expected Dixons to float between 20 and 25 percent of the business. Since its launch last September, Freeserve has added billions of pounds to Dixons' share price as the electrical store gained a new, more glamourous dimension as an Internet stock. But Freeserve's success has already spurred a raft of competitor free service providers, including the UK's biggest supermarket Tesco Plc <TSCO.L>, the top selling tabloid newspaper The Sun <NCP.AX> and, last week, broadcaster British Sky Broadcasting Group Plc <BSY.L>. Competition plus a dramatic collapse in Internet stock prices in the U.S. have raised questions about Freeserve's future and its valuation. Some analysts say Freeserve may have missed the boat in terms of the Internet boom in the U.S., where there is already a glut of new issues. Analysts noted a flood of new Internet firms coming to market in the U.S. via Initial Public Offerings, with some 20 Internet IPO "roadshows" doing the rounds at the moment. There is also scepticism about Freeserve's potential because it has no real track record and its revenues, based on call charges, e-commerce and advertising, are difficult to estimate. Freeserve's share of telecom connection revenue from customers logging on to the Net looks to be secure until August 2001 under the current UK regulatory framework. But this could be challenged if recently launched "toll-free" services, including one by British Telecommunications Plc <BT.L>, start to take off. Freeserve hopes the bulk of its revenues will come eventually from e-commerce, which is currently about three years behind the more highly developed U.S. Internet retail market. "Investors will have to take a view on whether it will take off," said one of the analysts. Freeserve is believed to be using U.S. Internet service provider America Online <AOL.N> as a yardstick in its valuation because it has the closest comparable business to Freeserve based on its mix of businesses and revenue sources. AOL's subscribers, of which there are more than 15 million in total, are valued at about $5,000 each. But this would obviously need adjusting to reflect Freeserve's subscription free service, analysts said. At the other end of the scale, UK Internet service provider Easynet Group Plc <ESY.L>, with 135,000 subscribers, has a value per subscriber of 840 pounds. The implied valuation of Freeserve based on stripping Dixons' traditional retail business out of the share price is about 1.3 billion pounds, analysts said.