Freeserve may offer special share deal

FREESERVE, the free Internet service provider being demerged by Dixons, is considering special share deals for subscribers if it includes a retail offer as part of its pounds 1.5bn-pounds 2.5bn float.

The company has not disclosed details but believes special deals will help develop loyalty among its 1.25 million active subscribers. A healthy retail offer would also help underpin the float. It is thought Freeserve will be demerged by the end of July. If this proves impossible, the float will be put back to September.

In valuing Freeserve it appears the company will attach a value to each active subscriber. Taking America Online as the yardstick with a value per subscriber of $4,000, Freeserve would have a value per subscriber of pounds 1,500 to pounds 2,000, giving it an implied market value of pounds 1.8bn-pounds 2bn.

Freeserve measures an active subscriber as one who logs on at least once every 40 days.Freeserve's active subscribers spend an average 16 minutes a day on-line, but it is unclear how much of this time is spent within Freeserve's content or whether many use it for Internet access only.

Analysts suggest over half of Freeserve's revenues will come from e-commerce activities.