Internet Technology Group Plc now claims to be the UK’s biggest independent ISP following the acquisition earlier this year of Demon Internet by Scottish Telecom (CI No 3,387), and over the past year it has increased the number of subscribers from 26,000 to 80,000. Growth in this scale is an expensive business and costs have jumped from 379,000 pounds to 1.9m. But ITG has an interesting way to build up cash reserves to finance the growth of its network – investing in non-core businesses. The company would be showing a thumping 1.1m pound loss but for the handy contribution of 973,000 pounds from the sale of its stake in XAAR Plc, the UK-based ink jet printing technology group. To buy into Xaar before the company floated shows good judgement. Now ITG is backing, with a $3.25m payment in the current financial year, a joint venture with Wave Systems Corp, who is promoting a WaveMeter chip designed to promote e-commerce by giving a PC the facility of a charge card. ITG is encouraged at support for Wave from IBM and Standard Microsystems. The deal is designed to bring ITG a flow of revenue from network providers. ITG says that shareholders are protected by an agreement that ensures payment of a full license fee on achievement of specific milestones. If WaveMeter chips go on the motherboards of the leading PC makers, it will certainly be a good deal. But it is a risky undertaking for a company that is inevitably bleeding cash as it builds up a base of subscribers. The one consolation is that, as the Demon deal shows, there will always be a talc around anxious to buy up an ambitious ISP.
