Carphone Warehouse buys cut-price Tiscali

 

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By Barry Collins

Posted on 8 May 2009 at 10:20

Carphone Warehouse has completed a deal to buy Tiscali's UK broadband assets for a knock-down price of £236 million.

The deal will see Carphone become the UK's largest residential broadband provider, according to the company, with 4.25 million subscribers.

Carphone chief executive Charles Dunstone has told the BBC that the combined company will eventually have a single brand, although Tiscali email addresses will be preserved.

Binding the various brands together under one umbrella certainly won't be easy: Carphone has both the TalkTalk and AOL brands, while Tiscali counts Pipex, Freedom2surf and Nildram among its many acquisitions.

The deal brings to an end Tiscali's troubled 18-month search for a buyer for the UK business. Tiscali was close to a deal with Sky in March, but talks collapsed after Sky reportedly refused to meet Tiscali's asking price of £350 million.

Since then, Tiscali has seen its financial worries mount, with auditors Ernst & Young refusing to sign off the company's accounts because of "fundamental uncertainties on the business continuity", which could explain the discounted sale price.

Carphone notes that its takeover hinges on "EU competition authority clearance and Tiscali obtaining formal approval pursuant to its debt restructuring plan."

LLU plans

Carphone says it plans to migrate Tiscali's customers to a single, unbundled network over the next couple of years. "Approximately 50% of Tiscali UK's broadband base is unbundled today, compared to 78% of TalkTalk's existing base," the company claims.

"Within 24 months, it is expected that over 80% of the enlarged TalkTalk Group will be on a single, unbundled network, and this will
produce significant savings."

Tiscali's customers will also be moved on to Carphone's billing platform over the next two years, helping the company achieve claimed savings of up to £50m by 2011.

Are you a Tiscali customer? Do you welcome the move to Carphone Warehouse or will you be looking for another provider? Let us know on comments below