Carphone Warehouse is to buy internet service provider (ISP) Tiscali UK in a £236m cash deal that will create the UK’s largest consumer broadband provider.
The deal will see Tiscali UK merge with Carphone’s telecoms arm TalkTalk, to provide broadband services to more than 4.25 million customers in over 25% of UK households.
TalkTalk will become the UK's second largest broadband provider overall, behind BT which has 4.7 million subscribers (including business customers), with Virgin Media in third place.
Italian ISP Tiscali has been seeking a buyer for its UK arm for over a year, after reportedly refusing an informal £550m offer from Carphone Warehouse in May 2008.
Tiscali, which had 1.77 million UK broadband subscribers last September, is said to have racked up debts of more than €500m, and trading of its shares were suspended when talks with BSkyB, over the sale of its UK assets, collapsed in March.
Charles Dunstone, CEO and founder of Carphone Warehouse, said the news would end a period of uncertainty for Tiscali's customers and promised them an uninterrupted service.
“The most important message for Tiscali customers is that their service will continue and improve,” said Dunstone, who added that the merger would create efficiencies that would generate savings of around £50m by 2011.
“Combining Tiscali with TalkTalk creates a unique platform that will allow us to innovate faster and provide an even better service for our enlarged customer base,” he said.
The deal is scheduled to complete by the end of next month.
© Crimson Business Ltd. 2009