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December 5, 1995

BRITAIN’s NATIONAL GRID CO ACNOWLEDGES DISAPPOINTMENT WITH ENERGIS PERFORMANCE

By CBR Staff Writer

The UK National Grid Co Plc has admitted that Energis Ltd, its loss-making telecommunications company, is developing more slowly than envisaged and that outside partners may be again sought in an attempt to reverse its fortunes. The company has already turned AT&T Corp away as an investor because its proposals put a lower valuation in the business than some of the regional electricity companies were prepared to put on it. Now that the latter are distributing their shares in the National Grid Co in a flotation, the company will be free to put its own valuation on Energis. Energis lost ú53m in the year to March 31, on top of the ú13m it lost last year, and another ú40m in the six months to the end of September. The prospectus for the Grid Co, which is expected to be valued at ú3,800m when it floats this month, states that Energis is not living up to expectations and adds that the unit is evaluating the opportunities to strengthen its position through equity partnerships, joint ventures or other forms of strategic alliance.AT&T makes little secret of the fact that it thinks there is now so much telecommunications capacity in the UK that it is not really interested in owning infrastructure here. An alliance with cable television companies is another possibility, but Mercury Communications Ltd needs that so much that the door will likely be closed on Energis. Energis has built a national trunk network by stringing 2,500 miles of high-capacity fibre-optic cables between existing electricity pylons. However, the system has had difficulty finding clients in a market where there is surplus capacity. In its latest attempt to put more traffic on to its wires, Energis is planning to offer a video-telephony service to its customers, among them the British Broadcasting Corp and Hertz Ltd next year. Personal computers would be used as the video terminals, and it is currently negotiating with personal computer suppliers in an effort to get the system going.

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