Broadband pioneer hits a sticky patch

NEWS UK broadband provider Redstone is scouring the City for cash after plans for a rights issue were scuppered by a share price meltdown that has mystified analysts. The company has pioneered commercial SDSL, established metropolitan area networks in seven cities and built a small national network, but its shares have fallen 60 per cent to 11p in the last week. Robin Duke-Woolley, analyst at Schema, said: "The company's decision to use the BT backbone was excellent. They probably should have done it sooner. It's the way ahead, as all attempts in the US and Europe at combining ADSL and local loop unbundling to force competition have failed. "They have chosen the right way to go ahead so [the share slump] is a mystery." Redstone is not commenting but has issued a statement from the directors saying it is "currently in discussion with a number of providers of both debt and equity". The company expects to make an announcement by the end of next week, when it will present its year-end preliminary figures. Redstone currently has over £11m in cash, enough to fund its plans for another year.