Carphone Warehouse to acquire Tiscali UK

The UK's new largest home broadband provider will be formed next month with the Carphone Warehouse buying the UK arm of Italian ISP Tiscali for £236 million. Tiscali's future has been in doubt due to bad debt and since the business was put up for sale last year negotiations with the Carphone Warehouse and rival BSkyB have been on and off.

Carphone Warehouse will pay just £236 million of the £600 million that Tiscali originally wanted and will integrate the internet service provider with their current TalkTalk services. The company, which also operates AOL broadband in the UK, says that it is yet to decide whether to keep the brand name or not but that current customers will be able to keep their Tiscali email addresses.

There will be approximately 4.25 million UK homes subscribed to services operated by the Carphone Warehouse once the acquisition is completed, which is expected to happen before the end of next month, equating to over 25% of the residential broadband market. This is in comparison with the UK's other main ISP BT who provide residential internet services to 3.9 million homes, although claim to have 4.6 million subscribers overall including 700,000 business customers.

Despite turning down an initial bid of $550 million from Carphone Warehouse about a year ago, Mario Rosso - the chief executive of Tiscali - tried to put a positive spin on the news: "The transaction should be considered in light of the strong consolidating trend in the highly competitive UK market, evaluating Tiscali UK activities as a whole, thus preserving the value of its industrial assets and know-how within the Carphone Warehouse Group." Charles Dunstone - chief executive of the Carphone Warehouse Group - added: "We very much welcome Tiscali's UK customers and staff to TalkTalk. Together we intend to continue leading the way in UK broadband."

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