Thus, formerly Scottish Telecom, which includes the Demon internet service, will be valued at between �1.75bn and �2.05bn when it floats on the stock market.

Scottish Power plans to sell 49.9% of Thus, with the final price to be announced on 10 November.

While most of the cash will go to Scottish Power's coffers, about one third of the proceeds will be used to fund Thus' continued growth, Scottish Power said.

The Demon internet service has 260,000 paying subscribers. The company also provides business telecoms services and call centre services.

Internet focus

The majority of Thus revenue already comes from its internet and interactive services business, and it is this area the company wishes to concentrate on, a report in the Financial Times said.

The company is also expected to seek tie-ups with US carriers. Thus managing director Bill Allan, said: "We want to develop our US network coverage very aggressively."

In the year to 31 March, the company generated revenues of �166.1m.