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Thus, the Glasgow-based alternative telco, blamed fierce competition for a slide in earnings as rival operators scrap hard for new business. Confirmation that market conditions remain tough came as the company behind the Demon internet brand reported that while turnover for the six months to the end of September was up 13 per cent at £177.5m, EBITDA (earnings before interest etc) slipped to £18.1m from £20.6m last year.

And despite bragging about winning "significant" new contract wins from Chrysalis Radio, Scottish Prison Service and South London and Maudsley NHS Trust, it was unable to hide the fact that it made an operating loss of £26.4m over the period.

Of course, the company had already flagged these problems in September when it warned that tough trading conditions and predatory pricing from rivals had squeezed margins.

Turnover from its internet business swelled six per cent to £45.1m with revenues from broadband up 57 per cent (£5.1m) to £14m. This increase was reported as its customer base climbed 77 per cent to 70,000. Snag is, this increase was largely at the expense of a sharp fall in revenues from dial-up net access, down £4.3m to £10.9m, as the number of narrowband punters fell to 90,000 during the year.

Said chief executive William Allan: "Looking ahead into the second half, while we remain cautious on pricing and the market structure for telecommunication services in the UK, contract renewals and business expansion from existing customers combined with new customer accounts will deliver further growth. Against this background, it is expected that for the year ending 31 March 2005, THUS will deliver revenue of not less than £360m, continued positive cash flow and EBITDA of not less than £39m."

Thus, which used to be known as Scottish Telecom, was created ten years ago by ScottishPower. The business floated as Thus on the London Stock Exchange in 1999 with ScottishPower remaining a major shareholder. In March 2002, Thus demerged from the ScottishPower Group. ®

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