Planet Online deal secures ISP foothold for Energis

Energis has paid £75m for Planet Online, a Leeds-based Internet service provider (ISP) which targets the business market.

Energis - which operates a high-speed UK network piggy-backed on the National Grid's power lines - said the acquisition adds to its portfolio of value-added Internet and intranet services, and delivers a substantial corporate customer base.

Ever since Demon Internet was bought by Scottish Telecom earlier this year, Planet has billed itself as 'Britain's largest independent ISP'.

Daniel Bieler, analyst at Ovum, said: "This deal makes a lot of business sense. Both companies have shown they know their markets, they target the same customers, and now they can feed off each other."

Bieler said Planet will be in a better position to offer its customers service level agreements, as it will be in control of its own high-speed network, making use of Energis' frame relay and ATM (asynchronous transfer mode) services.

"An ISP without its own backbone is in a very difficult position when it comes to guaranteeing network performance," he said.

For its part, Energis has secured a foothold in the ISP market - it already claims 40 per cent of UK Internet traffic travels over its network - and can start offering various value-added services.

Mike Grabiner, Energis chief executive, said: "This is an important step in Energis' development. It reflects the growing convergence of telecoms operators and ISPs. By acquiring Planet, we position Energis in the fastest growing sector of the business telecoms market."

Planet, like Energis, lists a number of blue-chip customers, including Barclays, Mirror Group Newspapers, Reuters and Thomas Cook.

The ISP will become a wholly owned subsidiary of Energis, with the telco liable to pay a further £10m should Planet meet performance targets up to March 2000.

Peter Wilkinson, Planet's out-going managing director, said: "The nature and role of ISPs is evolving to meet the ever increasing demands for complex internetworking solutions. Increasingly, this requires integration with a telecommunications operator."