Potential buyer eyes up Tiscali

Press reports suggest that The Carphone Warehouse is lining up a bid for rival ISP Tiscali.

Tiscali admitted last month that it would be open to a buyout, though it also said it would not consider breaking the company up.

Tiscali is an Italian company, but The Carphone Warehouse is thought only to be interested in the firm's UK operations, according to The Times.

If a takeover did take place, it would make The Carphone Warehouse the biggest ISP in the UK, as it owns the TalkTalk and AOL brands as well.

TalkTalk and Tiscali have been among the most active unbundlers in the UK, meaning they don't need to rely on BT's network to provide internet and telephone services to many of their customers.

Another reason that Tiscali may be an appealing buy to The Carphone Warehouse is that it has an IPTV (Internet Protocol Television) service, Tiscali TV, which would let it compete with BT Vision, Sky and Virgin Media's TV services.

Tiscali itself recently bought out rival ISP Pipex and has around two million customers in the UK.

Analyst Michael Philpott of Ovum said that he considered Tiscali's reluctance to break up the company as a massive stumbling block.

"This deal could never get off the ground as Carphone is only interested in Tiscali's UK business, and Tiscali has stated it is not interested in splitting its business up," he said.

But, he didn't rule out a deal, saying Tiscali's hand could be forced.

"Tiscali may have little choice but to split up the business as the number of potential suitors wishing to take on both the UK and Italian parts of the business is likely to be limited," said Philpott.

He also said that a deal would be a bad thing for the UK internet industry, as it would mean that 85 per cent of the market would be in the control of just four companies - BT, Virgin Media, The Carphone Warehouse and Sky.

www.talktalk.co.uk
www.tiscali.co.uk
www.ovum.com
www.bt.com
www.virginmedia.com
www.sky.com