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Energis to become takeover target

Sale by National Grid will open door to future bids

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Internet Security Threat Report 2014

National Grid's decision to sell-off Energis could leave the telecoms group open to a take over in the next couple of years, analysts have predicted. By selling off between 71 and 75 million Energis ordinary shares -- around a third of its stake -- National Grid has been accused of merely cashing in on the telecoms boom. But yesterday's announcement that National Grid is to raise more than £1 billion from the sale of Energis could also be good news for investors eager to jump on the hi-tech share bandwagon. When the company was first floated in December 1997 its share price was listed at £2.90. In a little over a year its price has rocketed to nearer £16.50. It has now increased still further, leaving Energis' share price hovering today at around £17.50 -- an increase of more than 6 per cent on Tuesday's close. As the telecoms group that carries Dixons' free Net access service, Freeserve, Energis has received huge amounts of publicity over the last three or four months. But analysts warn that this particular runaway success story won't necessarily generate a lot of cash for the company since margins are so tight. What's more, the telecoms watchdog, OFTEL, is considering regulatory changes in the coming months. If it decides to alter the pricing model that telecoms companies get for carrying calls, it's possible that free Net access model that has sustained a revolution among UK ISPs may no longer be viable in its current state. ®

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