Dwindling demand flays Fibernet

TELECOMS group Fibernet has plunged into the red after struggling to cope with dwindling demand in Britain and running into problems with its new German operation. Following a January trading warning, the corporate network provider has axed 50 jobs as part of a £1m restructuring and chief executive Charles McGregor points to £17.5m in recent contracts as evidence of a recovery.

However, those new orders will take at least six months to feed through to the top line. Fibernet will spend £3.5m of its remaining £59.5m to finance the initial connection for companies such as banking giant Citigroup and City law firm Allen & Overy.

Sales at the group's German operation are disappointing. Chairman Lord Wolfson warned that Fibernet will feel the full impact of depreciating the group's European assets for the first time in its full-year figures.

Fibernet posted a £10.2m loss for the six months to 28 February against a £3.2m profit last time. Sales fell to £21.5m from £24.6m, while losses per share were 15.4p compared with earnings of 6.2p previously.

The group has spent about £35m since the start of the year. But McGregor said its cash resources would be more than sufficient to see it through the market downturn. His comments and news of improving prospects helped Fibernet shares add 5 1/2p to 124p.