UK telecoms firm Thus has reported sharp losses as a result of expanding its network. The group, formerly known as Scottish Telecom, was also driven further into the red by a one-off charge after pulling out of radio telecoms technology.
The one-off charge of $72.2m was incurred after the group decided to abandon so-called fixed radio access technology for its services. In the year to 31 March pre-tax losses at the company, best known for Demon Internet, was $104.7m, up from $15.4m.
Chief executive William Allan commented: "This year's results demonstrate progress as we refocus our business from a regional telecoms company into a provider of next generation telecommunications and internet services to the UK business market.
“Stripping out the impact of the facilities management contract with ScottishPower, underlying turnover increased by 37 per cent. Capital investment was accelerated by 60 per cent to £161 million to begin the first phase of our UK national network. Earnings were constrained as we stepped up infrastructure, marketing and sales support activity ahead of future growth.
"We are first in the UK to combine Internet Protocol (IP) with Multi Protocol Label Switching. This will enable us to deliver multiple and guaranteed quality of service grades for information transmission over IP. We have introduced new competitive tariffs on our traditional services, including the first innovative flat rate calling tariff across the UK and the USA. We believe this pricing model, primarily based on charging customers on the capacity that they use rather than on time and distance, will prevail in the IP world. Our first IP based transmission services will be launched from the middle of this financial year.
Its internet service provider business, Demon, saw subscriber numbers fall to 207,000, which it said was due to low-use subscribers moving to free internet services. The remaining customers increased their use of Demon with an average subscriber now surfing the internet for more than 20 hours a month, the highest reported use in the industry.
Allan said: "Through Demon, Thus is the UK's largest web host and last year we increased our commercial hosting base by 50 per cent to 15,464. To meet future demand, we have brought two new data centres on line and are announcing a further two centres.
"To give customers access to any service over any device at any time, we are currently undertaking commercial trials of ADSL service to 500 customers and are the first, non-mobile operator to enable our hosting and access facilities with Wireless Application Protocol (WAP) in a link-up with Nokia.