Thus achieves pounds 2.4bn price tag as shares surge to 9% premium

THUS, the telecoms start-up developed by Scottish Power, made a solid if unspectacular debut on the Stock Exchange yesterday when it closed at a modest 9 per cent premium to its bumped-up 310p flotation price.

That valued the company at nearly pounds 2.4bn, demonstrating again the market's enduring appetite for telecoms stocks in the early stages of their business development. After floating at 225p in July, Kingston Communications closed at 585p last night, while RedStone Telecoms, floated last month, has more than doubled in value.

Thus soared to 385p in the opening 15 minutes of trading, but faded later in the session to close at 336p in extremely heavy volume of 150 million shares.

Scottish Power floated 49.9 per cent of the company in the issue, which was nine times oversubscribed. The float, co-ordinated by Goldman Sachs, raised about pounds 1.1bn, including pounds 327m from new shares.

The float vindicated Goldman's move to up the value of the initial public offering during last month's book-building. Money raised from the issue will be invested in developing Thus's network, paying off intercorporate loans and improving the content of Demon Internet, its Internet service provider.

"A lot of people bought into our strategy and the plans we have to make it a reality," said Thus chief executive Bill Allan. "We had no reservations about raising the asking range given the fantastic demand and expectation that the stock would trade higher."

Analysts believe that Thus, like Kingston Communications, will be pursued by tracker funds once it is among the FTSE 250 index of mid-cap stocks.

Demand for the stock could also be boosted by the FTSE Equity Indices Committee's decision last night to allow the telecoms start-up to qualify as a fast entrant to the FTSE techmark 100 index