Outlook: Net gains for Energis
Saturday 29 August 1998
For Energis, this is a somewhat counter cultural purchase since, unlike the rest of the group, and most other internet businesses, Planet Online actually makes money. All the same, Energis is paying a very full price for its slice of tomorrow's world. It works out at pounds 500,000 per Planet Online employee, three times last year's sales and nearly 150 times profits. Then again, this has got nothing on Energis, which valued at pounds 1.3bn by the stock market, has yet to poke its head above the red ink.
The fit is undoubtedly a good one. Energis already carries some 40 per cent of UK national internet access traffic and Planet Online operates in exactly the same corporate part of the communications market as Energis, offering businesses a range of intranet and internet services. Its clients include us at the Independent. The opportunities for cross selling are obvious while the acquisition adds another string to the bow of value added telecommunications services Energis can offer its corporate customers.
Whether all this justifies pounds 75m is anyone's guess. The stock market, which received the news positively yesterday, seems to believe it does, but then the City is in love with the telecoms sector right now and, even in these turbulent stock market conditions, investors seem incapable of viewing it in anything other than a sunny disposition. Apart from poor old Ionica, that is.
It's easy to dismiss this as just the latest stock market fad, but it is a view not entirely without foundation. Telecommunications volume is growing like topsy. Since the causes of this are to do with the information technology revolution, rather than the business cycle more generally, the trend may not be unduly damaged by economic slowdown. Furthermore, there is a growing demand for value added, enhanced services, particularly in the corporate market. So the long-term outlook for this sector is a good deal rosier than most.
All the same, there's a faintly defensive air about this acquisition. Internet service providers are being snapped up all over the place, and mainly by other telcos too. Since internet traffic is such an important ingredient of Energis's present revenue base, this obviously poses a threat, forcing the company to itself engage in a little bit of vertical integration. In the scramble for position in this fast growing market, the risk of overpaying is all too obvious.
- 1 Qataris pledge to expand Canary Wharf
- 2 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 3 Women think Irish men are the sexiest, survey finds
- 4 Florida couple forced to register as sex offenders for having sex on public beach
- 5 Watch eerie drone footage of destroyed building in Stalingrad
#JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
Florida couple forced to register as sex offenders for having sex on public beach
General election 2015: 'Nasty party' Ukip faces fresh questions over candidates on eve of vote
Who should I vote for in the general election? Take The Independent's interactive quiz to find out which party is the right choice for you
Ohio 'Shawshank Redemption' fugitive Frank Freshwater arrested after 56 years on the run
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General Election 2015: Sturgeon claims Scots 'appalled' by Ed Miliband's refusal to work with SNP
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...