Competition in the UK internet access market increased again yesterday when LibertySurf, a French company part-owned by Kingfisher, announced plans for a cut-price service in Britain.
LibertySurf plans to offer unlimited internet access at off-peak times for a flat rate of £20 a year. Computer discs for the service will go on sale in Kingfisher's Comet and MVC stores from today and in branches of Woolworths from June.
Customers using the service at busy periods will be charged higher prices. Peak time usage will be charged at 1p per minute although for higher flat fee of £35 customers will receive 12 months' unlimited access at any time of the day.
Greg Sukornyk, chief executive of LibertySurf, commented: "Consumers are tired of being given the promise of "free" with the reality of large phone bills. LibertySurf instantly delivers what the customer is crying out for - a simple and clearly priced way of getting on-line."
Analysts said it was an aggressive move by LibertySurf. "It's quite punchy though it is not a no-strings-attached deal," said Nick Bubb, an analyst at SG Securities.
LibertySurf launched in Europe in April last year and has 1.7 million customer accounts. Kingfisher has a 38 per cent stake in the business, which acquired the X-stream free internet service provider in the UK in January. Group Arnault owns another 38 per cent.
LibertySurf's UK launch follows a string of similar new packages from companies such as NTL, AltaVista and BT as rivals attempt to grab a share of the growing internet market.
It is also blow to Freeserve, Britain's largest free internet service provider with 1.9 million regular users. LibertySurf's UK launch comes just days after Dixons, the electrical retailer group which owns 80 per cent of Freeserve, announced that it had appointed Goldman Sachs to review its options for its Freeserve stake. Speculation has suggested that Dixons will sell half its stake and return funds to shareholders.
Miles Saltiel, a director of technology at West LB Panmure, said: "The price of Freeserve is held in a tension between a deterioration in the fundamentals, and the possibility of a takeout." Mr Saltiel added that the LibertySurf launch re-inforced the growing competitive threat to Freeserve but also made it more likely that Dixons would sell out.
LibertySurf's UK launch came as Kingfisher unveiled a positive first-quarter trading statement. Group like-for-like sales in the 13 weeks to 29 April rose by 7 per cent. Comet was the star performer with a 17 per cent increase. Total group sales, including new stores, rose 12 per cent to a record £2.63bn. Kingfisher's chief executive, Sir Geoffrey Mulcahy, said: "This is an encouraging start for the year, given the extremely competitive retail environment we are facing across all of our markets."
Freeserve shares closed 11p higher at 416p. Kingfisher rose 30p to 583.5p.Reuse content