- guardian.co.uk, Monday 27 September 1999 03.15 BST
Freeserve is tomorrow expected to reveal plans to launch its own online auction service as it attempts to lift the flagging growth of its subscriber base.
The move will increase the pressure on QXL, Britain's leading online auction house, which plans to float next month and has seen its valuation halved since the summer as competition among on-line auctioneers intensifies.
Freeserve, Britain's largest free internet service provider has seen its subscriber growth slow in recent months after the launch of a series of copycat services. Concern over its growth prospects, combined with uncertainty over the current valuations of internet stocks, forced Freeserve shares below their 150p issue price last week.
Analysts believe Freeserve will disclose that it has added only 100,000 net new subscribers during the summer quarter, giving it around 1.45m active users. Its auction facility is the first of what is likely to be a series of new services.
By launching the service, Freeserve is also entering an extremely competitive market. QXL was touted as a £750m business when news of its plans to float leaked in the summer. Last week it set its flotation value between £212m and £242m. Plans by eBay, the world's largest on-line auction house, with a valuation of $19bn, to set up a European service threaten further to upset the balance of power in the market.
Investor confidence in internet flotations has been badly damaged by the Freeserve experience. However, the appetite for net stocks is still strong enough to bring some smaller players to market. Oneview.net recently said its planned £19m flotation on AIM was five times over-subscribed.
