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. Last Updated: 07/27/2016

Europe on the Verge of Internet Boom

FRANKFURT, Germany -- Europe is on the verge of repeating the Internet boom that transformed the U.S. economy in the last five years, a report by U.S. brokerage house Morgan Stanley Dean Witter said.

The number of Internet users in Europe should triple over the next four years to more than 100 million, unleashing a flurry of economic activity and opening up dramatic investment opportunities, the company's 360-page report said.

"European Internet users seem to be at the same stage as the U.S. was three years ago - poised for explosive growth," Morgan Stanley wrote.

"Internet penetration levels are low, but have passed the 10 percent rate where U.S. investor interest in the Internet story began to take off."

Some 34 million European adults use the Internet now - about 12 percent of the adult population and around 8.9 percent of households. Morgan Stanley forecast the number would climb to 103 million in 2003, "reaching a critical mass of 35 percent."

Falling Internet access costs - driven in part by the rise of "free" Internet providers - and faster access speeds are luring more people onto the information highway, Morgan Stanley said.

The rising numbers will spark a wave of spending, matching the trend experienced in the United States from 1994 onwards, Morgan Stanley said.

Computer, telecommunications and media groups will seek to provide Internet access and content, and retailers, airlines, banks and other companies will invest to use the Internet to reach the increasing audience of online consumers.

At the same time, Europe will see more and more "pure Internet" companies of its own that could follow the performance of U.S. stars like Yahoo!, and EBay.

"An attractive group of companies is emerging rapidly, benefiting from lessons learned in the U.S.," the report said.

The report, which involved more than 30 analysts looking at 10 different industries, is available online at

The report names 11 large-cap companies that Morgan Stanley analysts see as well-positioned.

Seven are telecoms groups: Colt Telecom PLC, Energis PLC, Equant NV, KPN NV, NTL Inc., Sonera and Telewest Communications PLC.

Two produce telecom equipment: Alcatel SA and Nokia. The other two are software group Atos SA and Dutch cable group UPC NV.

The report listed another 29 companies that are developing European Internet businesses.