Energis's losses are no real concern

ENERGIS, the business telecoms company which join-ed the Footsie100 index in March, is expected to announce a loss of #19 millionnext week on revenues of #280 million. But analysts are stillrecommending the company as a strong buy for investors as the firmhas a major role to play in the future consolidation of the boominginternet market.

"Its Freeserve, the internet service used by Dixons and manyothers, has been a phenomenal success with 1.3 million customers andPlanet Online, which it bought in August last year, is a remarkablygood fit," said one London telecoms analyst.

Scottish Power has played down any speculation it might beinterested in a deal involving Energis and Scottish Telecom, part ofthe Glasgow-based utility.But it is known Ian Russell, Scottish Power's deputy chiefexecutive and chairman of Scottish Telecom, has followed withinterest the National Grid's partial sell-off of Energis, which waspublically listed in December 1997.He sees this as a possible model for the future of ScottishTelecom. Although a stock market listing rather than a trade salefor Scottish Telecom still looks to be the preferred option.Energis has built its national network along the National Grid'selectricity pylon infrastructure with more than 3,000 miles of fibreoptic cable installed throughout England and Wales, and a capacitysharing agreement with Scottish Telecom. Planet is a wholly ownedsubsidiary of Energis, bought in August 1998.Questions will be raised this week on National Grid's pendingacquisitions of two US utilities groups. The group's annual profitswill be distorted by the exceptional earnings made on the disposalofa quarter of Energis. HSBC Securities has pencilled in pre-taxearnings of #436 million, with the warm winter likely to havedampened profits from its UK electricity transmission system.Another utility, National Power, is expected to be dominated bynews about the company's future plans in the face of chief executiveKeith Henry's recent resignation.Greig Middleton said UK generation figures should be satisfactorybut international profits were likely to be disappointing due toproblems at its Hubco power station in Pakistan.The ongoing saga of its disposal of the Drax power station and thesale's likely impact on earnings will also provide some interest.Taxable profits are expected to come in at #588 million.