Energis targets business

ENERGIS, the long-distance telecoms supplier, yesterday unveiled an alliance which will speed up its plans to build local telecom networks in UK cities and boost its chances of competing with British Telecom in the pounds 6bn business telecoms market.

Energis is setting up a joint venture with Deutsche Telekom and France Telecom, the German and French state carriers, to build local telecom networks in London, Birmingham and Manchester. It later hopes to repeat the exercise in five other UK cities.

The networks will allow all three companies to access business customers without having to rely on others to provide the final physical connection to the customer. Although Energis has its own long-distance network, it still has to rely on existing local operators such as British Telecom or Cable & Wireless to carry calls over the final few miles.

However, the new plans will see a new company, to be known as MetroHoldings, construct a local "ring" in each of the three cities, using high-capacity fibre-optic cable. Each of the three joint venture members will then connect business customers by laying cables from the ring to the customers' offices.

Energis will own 50 per cent in the new company, with Deutsche Telekom and France Telecom each taking 25 per cent. The French and German groups said they also had an agreement that would allow Sprint, the US carrier which is the third member of their Global One long-distance joint venture, to take over some of their shares.

Mike Grabiner, Energis's chief executive, said building networks in the three cities would cost about pounds 100m. In addition, the three consortium members are likely to spend another pounds 100m laying cables to connect their customers to the networks. Under the terms of the agreement, Energis will build and operate the network in return for a management fee.

Mr Grabiner said the local networks, combined with Energis's national long-distance network, would allow it to offer customers a range of sophisticated data transmission services. At the moment, the company can only justify offering a direct connection to very large customers.

Analysts said the move allowed Energis to complete the construction of its network earlier than previously planned while sharing the cost. At the time of its flotation last year, the company had announced plans to build local networks.

Energis shares surged 19 per cent to close at 665p, up 106p.