Energis to raise £400m from placing

Energis, the alternative telecoms network operator, yesterday tapped the market for £400m with a placing of 77.7 million new shares to fund the development of high-speed internet and related services.

Energis, the alternative telecoms network operator, yesterday tapped the market for £400m with a placing of 77.7 million new shares to fund the development of high-speed internet and related services.

Mike Grabiner, chief executive, said: "The placing will provide us with greater financial strength which will enable us to develop further our business in the UK and continental Europe, to leverage our extensive network and improve local access by exploiting new technologies."

The dilution of existing stock saw Energis shares tumble 11.3 per cent to 525p. That wiped out £1bn in market value, leaving the company the worst FTSE 100 performer.

Energis will use the money to extend its UK network to tap into 1,100 British Telecom local exchanges. This is to facilitate the roll out of high-speed internet services to small businesses. Energis also needs funds to bid for high bandwidth radio wave licences when the government frequency auction begins 16 October.

In a trading update, the company said six month to September sales and operating cash flow grew "strongly". With the new funds Energis has a total cash and debt facility of £900m.

The move is the latest indication that Britain's big telecoms players are lining up to invade BT's local network when it becomes open to competition from January. So-called local loop unbundling will force BT to share access to its local copper lines that link to homes and businesses.

Mr Grabiner, a former senior BT executive, called on Oftel to verify space availability in the former monopoly's 6,500 local exchanges. It is in the exchanges where Energis, WorldCom, NTL and others have to locate digital subscriber line equipment to provide high-speed internet services.

"One of the things Oftel doesn't have is a plan to have full independent assessment," Mr Grabiner said, referring to the question of capacity in BT's local exchanges. "You can't leave it to BT."

He also urged David Edmonds, Oftel's director-general, to take a strongly pro-active approach to adjudicating the co-location of DSL equipment in BT's exchanges. "Leaving thinks to be sorted out between BT and others is fairly unbalanced, since BT has all the cards."

Mr Grabiner added: "We're clearly behind the US in unmetered internet, but ahead of continental markets. But in terms of [local loop] unbundling we're six months behind Holland and 12 months behind Germany."