By Brian White
Dixons Group Plc expects its free ISP service, Freeserve to break even in the current financial year after attracting 900,000 registered users. It now calims to be the biggest UK ISP after just three months in operation. Its success has sent the share price rocketing to a 12 month high of 926 pence. However, AOL, the next largest ISP with 550,000 users, has questioned Dixons’ figures, maintaining that most people will try a free service once. Dixons insists that it has 700,000 active users, which it defines as people who have used the service in the previous 40 days, and says the vast majority have used it in the previous three days. Capital costs for Freeserve were provided by Energis Plc, the telco formed around the fiber optic backbone built by the former state-owned electricity generator. In addition, Energis passes onto Dixons a small proportion of the connection fees it receives from connections by Freeserve users. The success of the operation has dazzled analysts, turned Dixons from a retailer into one of the UK’s few internet stocks, and left traditional ISPs puzzling how to keep their market share while still charging customers. Ironically, Dixon’s core business as the UK’s biggest retailer of PCs and other electrical goods, produced a mediocre set of mid-term results. Net profits for the first 28 weeks to November 14 were down 5.6% at 68.9m pounds on revenues that rose 10.5% to 1.45bn pounds.
