Broadband consolidation
Competitive bidding for the UK and Italian operations of Tiscali, the telecoms company based in Cagliari, Sardinia, was reported to be due to start yesterday, but so far the silence has been deafening.
Tiscali is the UK’s fourth-biggest (15%) broadband operator, with 1.7 million subscribers. It has only a 5 percent share of the Italian market.
Telecom Italia and Fastnet are the only likely bidders for Tiscali’s declining share of the Italian market, and they have no UK presence. Bidding may be livelier in the UK, where BSkyB, BT, Carphone Warehouse (CPW) and Vodafone are interested parties.
Acquiring Tiscali would put BSkyB third in the broadband market and crown the company’s strategy of protecting its satellite pay-TV business from triple and quadruple-play providers. The same strategy applied to Italy, where the company’s satellite pay-TV service is well established but where it has no broadband presence. This makes BSkyB the only potential bidder that can make good use of Tiscali’s operations in Italy as well as the UK.
BT would like to assure its status as the number one broadband provider by acquiring Tiscali, but could run afoul of competition regulations. Last week Vodafone denied reports in the Italian press that it had bid for Tiscali, but there is an obvious fit with its acquisition of Sweden’s Tele2 fixed-line business in Italy and Spain last year
The company with most to gain from acquiring Tiscali is CPW/TalkTalk. At a stroke it would overtake BT to become the leading British broadband provider. BT would also lose out on line-rental charges, because CPW would migrate Tiscali’s subscribers onto its own network. Finally, by acquiring Tiscali TV, CPW would become a competitor for BSkyB, Virgin Media and BT in IP TV service.
All involved have been studiedly nonchalant so far. Expect guns to be unmasked shortly.
