Tiscali to sell up "within two years"

 

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By Simon Aughton

Posted on 23 Jan 2008 at 12:33

Tiscali expects to sell its UK broadband operations within the next two years, as the internet market continues to consolidate in the hands of a few major players.

Tommaso Pompei, chief executive of the Italian company, says that he doesn't anticipate opportunities for further acquisitions to add to the purchases of Pipex in 2007 and Video Networks the previous year.

Being unable to grow at a time when the market is consolidating makes Tiscali ripe for takeover, he claims, though he stresses that with the company about to report its first net profit in its ten-year history, the company is not currently for sale.

The last two or three years have seen a number of medium-sized ISPs absorbed by the larger players. In addition to Pipex, PlusNet, Bulldog and AOL's UK businesses have passed into new hands. Pompei expects a second wave of consolidation over the next two years and believes Tiscali will be part of it.

"We do expect to be part of this process," he tells the Financial Times."This year for sure we'll be 100% focused on our results, but we are prepared to react should the consolidation take place."

Changing market

Tiscali is the UK's fourth biggest ISP with around two million subscribers. That it does not expect to survive alone shows how dramaticallt the entry of cut-price providers and triple- or even quad-play services have changed the market.

Two years ago Sky and Carphone Warehouse did not even offer internet access; now they are amongst the providers most aggressively marketing bundles packages of broadband, mobile/landline phones and television.

Sky has connected a million homes to the net while Carphone Warehouse has 2.6 million subscribers. And yet they pale alongside the market leaders: Virgin Media with 3.5 million and BT Retail in excess of four million. All four companies are able to leverage their leading positions in other markets - satellite TV, mobile phones, cable and landlines - to sell (and, if necessary, subsidise) broadband services.