ISP Consolidation is set to continue with the news that Demon, once Britain’s biggest internet service provider, has been put up for sale by its owner, the Scottish-based carrier Thus. Analysts put a valuation of £15m to £20m on Demon’s domestic business, which was one of the first independent dial-up web providers in the country.
The former Scottish Telecom acquired Demon in 1998 when the six-year-old business had 180,000 subscribers. Thus is believed to have received a recent approach for Demon’s home internet access business, which has around 50,000 UK broadband subscribers.
It has since sent out an information memorandum with financial details of the business to potential buyers to see if it can attract a satisfactory offer. Obvious possible candidates include Carphone Warehouse and BT.
Thus’s move is the latest in a massive round of consolidation sweeping the broadband access sector as fierce competition bites. Carphone Warehouse, which has led the price war with it’s “free” broadband offer, has also led the consolidation race. It acquired the UK operations of AOL earlier this month.
A sale of Demon’s domestic business would see Thus follow the same route out of the home broadband market taken by Cable & Wireless, where Bill Allan, Thus’s chief executive, worked before joining the Glasgow-based group. Cable & Wireless sold its Bulldog home broadband brand as part of a radical strategy to focus on large business customers.
Thus sold its Demon Netherlands business to KPN earlier this year for £47m.