RealTime IT News

Breathe.com Calls in Administrator

[London, ENGLAND] Breathe.com, the U.K. ISP that terminated "lifetime" unmetered access for 50,000 customers recently, confirmed over the weekend that it has gone into administration.

Although unable to find further financing to ensure its long-term future, Breathe.com will not close immediately. The administrator, PricewaterhouseCoopers, will try to sell the business as a going concern and even hopes to avoid redundancies among the 140 staff.

A statement from PwC said: "We are actively looking for interested parties to maximize realizations and secure the future for Breathe.com."

One of the ten largest ISPs in the U.K., Breathe.com has over half a million customers. It ran a major advertising campaign during the summer to attract new users, while its mobile service claimed to have (in September) 0.6 million users, helped by various "free phone" offers.

Poor management has clearly played a part in Breathe.com's fall. It recently withdrew its unmetered access package without offering refunds to subscribers who had paid £50 (US $75) for their supposed lifetime membership.

Breathe.com's investors are 3i and Chase Capital Partners which have a 35 percent stake, having put in £20 million (US $30 million), and founder Martin Dawes who has 65 percent. Dawes sold his mobile operation to BT Cellnet to finance Breathe.com.

The policy of spending heavily on TV advertising while at the same time kicking customers off the service has clearly not been a very sound business model. Breathe.com's demise should not therefore be taken as an indication that the bigger names in the industry are unstable -- although one or two certainly are.

There will, however, be a knock-on effect, with Breathe.com's problems having a negative influence on forthcoming ISP flotations and sales, such as the auction of LineOne by United News & Media.

Breathe.com's survival will now depend on finding a buyer.