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 news:  World Business:  Europe  
graphic Freeserve 3Q sales rise
Loss narrows as e-commerce, ad revenue and customer numbers increase

LONDON (CNNfn) - Britain's largest Internet service provider Freeserve said Thursday third-quarter revenue rose 36 percent to 5.1 million pounds ($8.1 million) as e-commerce and advertising revenue increased more than analysts expected.
    The Internet company, four-fifths owned by consumer electronics retailer Dixons (DXNS), said its net loss before taxation narrowed to 3.5 million pounds for the three months ended Feb. 5, 1999, from 3.6 million pounds in the previous quarter. The number of active customer accounts rose 16 percent to 1.822 million.
    Freeserve's position as Britain's leading web site is under considerable pressure. It was forced into announcing plans to stop per-minute charging for calls to the Internet in favor of a flat monthly subscription fee. British Telecommunications (BT-A) and cable companies NTL (NTLI: Research, Estimates) and Telewest (TWT) scrapped per-minute charging last week. 
    Currently, Internet users in Europe pay call charges to telephone operators for every minute spent online, as well as subscription fees to some service providers. The British government and analysts have accused telephone companies in the U.K. of holding back growth in Internet use by levying metered call charges.
    "The main value driver...is in developing a very strong advertising and e-commerce revenue stream," Credit Suisse First Boston analyst Shane Leonard told Reuters.    
    Freeserve said it agreed to buy Smartgroups.com, a company that offers services to online communities, for 60 million pounds to try to increase traffic across its Web site. The company also said it has been chosen to be the online partner for Camelot, the current operator of Britain's national lottery, in the lotto company's bid to retain its operating license. Camelot faces a challenge for the license from companies including Richard Branson's People's Lottery.
    Freeserve plans to carry out trials of broadband services, which will increase the speed of data transfer and enable it to transmit video pictures. Back to top
    --from staff and wire reports
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