ITG issues challenge to Freeserve

Internet Independent ISP announces first profit of #55,000 as it prepares to establish free internet operation.

The Internet Technology Group (ITG) will set up a free internett prepares to establish free internet operation. operation to rival Dixons' Freeserve, following the posting of its first profitable year.

ITG, founded by Jan Murray, originator of PC World, has revealed that it will be embarking on a free internet operation this year to capitalise on the burgeoning sector (PC Dealer, 3 February). The ISP, which is based in London, is in negotiations with a number of media and retail groups to challenge Dixons and will complete a deal in the spring.

The company has established itself as the UK's largest independent ISP with its two subsidiaries, Global Network and GX Networks. It recently acquired Dutch ISP, Internet Facilities Europe, for #4.27 million. It has also been allocated telecom licences in both the US and UK.

The announcement came with the unveiling of its results for the year ended 31 October 1998, which showed its first profit of #55,000 and a rocketing turnover, up 177 per cent at #11.01 million.

Laurence Blackall, chief executive of ITG, stated: 'Making a profit for the first time is good news, but of greater significance is the substantial growth we have achieved. With our national and international networks, the company is well placed to sustain this growth and become a larger player in the global connectivity market.'

The increasing competition in the free sector drove Dixons to announce a reduction in the price of telephone support to 50p a minute and the high street giant has also informed the industry that it will be launching a Freeserve finance channel for stocks and shares in March. Online trading will be added to its operation in the summer.

Nick Gibson, analyst at Durlacher, said: 'This move by ITG is not a surprise. There will be further advances into the free sector as more retailers march in. There will also be a second forced movement with companies chasing others. It's a lucrative business to provide a vanilla service.'

UUNet is also launching a similar service for business users, which will offer free internet access.