Shares in Thus slumped

Thus said standard dial-up subscription revenues had fallen 13% at its Demon internet service provider (ISP) as retail customers defected to rivals offering "free" net access.

The company singled out British Telecommunication's SurfTime service, which offers consumers a flat-rate ISP with free calls at weekends and evenings.

"It is reducing our revenues because basically people are moving towards SurfTime's pricing structure," said a Thus spokeswoman.

But she declined to elaborate on how Demon might respond.

Thus, which is 50.1% owned by ScottishPower, reported a six per cent growth in turnover to �50.6m for the quarter ended on 30 June.

'Silver lining'

The loss before interest, tax and depreciation was �8.7m, compared to a positive figure of �1.7 m in 1999.

Chief executive Bill Allan said good growth in business revenues provided a silver lining for the first quarter.

"Despite a disappointing performance in consumer services and lower than expected headline growth, the business focus of the company shows good signs of progress with business revenues up by 24%," he said.

During the first quarter Thus increased its operational network by 210 kilometres to more than 5,400km.

Earlier this month it won a major contract to provide the network system that supports Sky's telephone offering Skytalk.