Business staff tips
Last Updated: 11:31pm GMT 26/12/2006Page 2 of 3
Pipex
Dominic White
Anyone who has signed to broadband or tried to switch supplier knows that it can be a frustrating process.
But once you've got a high-speed web connection, just like electricity and gas, you find you can't do without it. This type of consumer apathy towards switching suppliers has helped utility companies to continue coining it in for years. So while net growth in broadband subscriptions is slowing, the value of companies with customers already signed up is on the rise. Carphone Warehouse recently paid £250 for each of AOL UK's 1.1m subscribers.
Pipex, which has 600,000 broadband subscribers, is trading at 13p or over 30 times forecast 2006 earnings, falling to nearer 20 for 2007. Investec's sum-of-the-parts valuation of 16.7p a share assumes a value of £250 per broadband subscriber. Raising that to £300 per subscriber would lift the valuation to 18.3p, offering serious upside to the share price. Plus Pipex uses David "the Hoff" Hasselhoff in its advertising. What more could you want?
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