How much is that Freeserve in the window

UK ISP set for £2 billion price tag after all, woof woof

Pre-float speculation on the final value of Freeserve is mounting with only two weeks to go before trading begins. Reports out today indicate that the UK's self-proclaimed No 1 ISP is likely to be valued at around £1.5 billion. This is substantially less than the claims of £2.5 billion that began to circulate when talk of a Freeserve IPO first came up. Nonetheless, it would make the Dixons-owned ISP the largest publicly quoted Internet business in Europe. A value in the region of £1.5 billion could reflect the need to discount the company’s shares by as much as 30 per cent to give initial trading the fillip it needs given the absence of a trading history. So, the final value of Freeserve could in fact be more like £2 billion. One of the financial houses working behind the scenes on the Freeserve float, Credit Suisse First Boston (CSFB) has put together some impressive looking earnings forecasts for Freeserve. At the moment, the bulk of Freeserve income is generated from that portion of the call charge it retains. This is a fairly small amount as things stand, with Freeserve bagging only around 10 per cent of the money generated by its users going online. Ecommerce will change this picture though. CSFB reckons that: "Freeserve's ecommerce revenues will rise ninefold from £900,000 in 1999 to £8.2 million in 2000," according to today’s Financial Times. Kerrching! Freeserve has said that around one-in-12 of its users have applied to take part in the share offering. Around 18.25 per cent of Freeserve is being floated by Dixons. ®

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