UK internet service provider Affinity Internet Holdings Plc is to take advantage of its recent three-fold increase in share price and raise 19.4m pounds ($31.1m) with a share issue. The money will be pumped primarily into the UK, AIM-listed firm’s online games and voice telephony divisions, and follows a deal clinched with London-based Colt Telecom Group Plc, under which the carrier will resell Affinity’s virtual internet services.
Affinity has several operating companies, which offer clients the chance to become virtual ISPs and virtual telcos, while its EGO Maniacs.net Ltd subsidiary offers consumers online games. The company’s share-price graph has an almost vertical line covering the last three weeks of trading, which have seen a rise from just over 400 pence to a current high of 1835 pence, up another 14.7% yesterday. This is mostly due, the company says, to the small number of shares in issue, the recent interest in tech stocks with the introduction of London’s TechMark index, and the winning of a number of high-profile clients. The 1,785,188 new shares will be sold at 1150 pence each.
Affinity’s main subsidiary, Virtual Internet Provider Ltd, relies almost entirely on taking shares of the per-minute revenues created when a user dials up the internet, a fairly shaky revenue stream that could falter with the potential introduction of unmetered and/or free access in the UK. VIP has yet to see enough traffic created by this service to cover its costs – both active and inactive users incur costs while only active users create revenue.
Under the Colt deal, the London Stock Exchange-listed carrier will offer VIP services to its own business clients, while becoming a supplier of network capacity to the ISP. Affinity has previously only used Cable & Wireless Plc as its carrier, and Fujitsu subsidiary ICL Ltd as its infrastructure provider.
Also yesterday, Affinity announced that it has bought ICL’s gaming operation, GameZone, for an undisclosed sum. It will integrate and rebrand the GameZone site into its EGO Maniac.net portfolio, which includes the Sega gaming channel HEAT.net, but will focus on non-violent games only. ICL is getting rid of the business as a non core activity.
