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Thus shares hit by profit warning

Company blames broadband revolution

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Shares in Thus, the telco and ISP, hit the skids today after the group issued a full-year profit warning. Thus blamed the news on the British public's enthusiastic embrace of broadband, and ongoing problems in its other businesses.

The news has come as something of a surprise, following recent positive spin on the same trend. Indeed, in May this year, Thus highlighted its customers' transition to broadband as one of its key milestones, stating proudly that it generated more revenue from ADSL subscribers than it did from those still using dial-up.

The company now says that the lower margins on broadband have put its core business under pressure. It said it expects to report earnings before interest and tax of between £47-53m, down from its earlier prediction of £53-59m.

By lunchtime, shares had fallen almost 20 per cent, or 4.5 pence, as house broker Investec also lowered its predictions for the company's earnings before interest, tax, depreciation and amortisation (EBITDA) by 16 per cent to £49.3m.

In a statement issued earlier today, the company said it was reviewing its position on its non-core activities: namely, its call centre and scratch-card operations. It said it expects to complete the sale of its contact centre business by July 31st, and that there would be an announcement on the Interactive Services (scratch-cards) segment later this year, following a review of its performance.

The company is not alone in its troubles: last week Colt issued a similar warning, also pointing to increasing pressure on its margins. ®

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Thus swells - thanks to ADSL
Thus looks to profit in 2005
Thus passes cash flow positive milestone

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