Carphone Warehouse Buys Tiscali UK For £236 Million

Carphone Warehouse has announced that it will be acquiring Tiscali UK for £236 million as it seeks to become UK's largest consumer broadband company with more than 4.25 million customers.

The company is also set to split into two separate entities with its telecoms branch, Talktalk, joining Tiscali as the process ends by the end of the year. Carphone Warehouse is currently the third largest broadband provider in UK and Tiscali the 5th largest.

The Tiscali saga lasted more than a year with the latest rumours emerging from Italy, about a potential purchase worth roughly £200 million. Sky, Vodafone and Orange were rumoured to be interested in acquiring the assets of Tiscali, which is based in Italy.

The EU has yet to formally clear the deal and the acquisition is expected to be funded by Carphone Warehouse's own stash of cash. Shares of the company rose by 6 percent as investors got enthused by the fact that the combined company now owns more than a quarter of the residential market.

Tiscali will be bringing in the remnants of past acquisitions (Homechoice and Pipex) to Talktalk. Other past acquisitions of Carphone Warehouse included Tandy, Opal Telecom, Talktalk, e2save, Tele2, One.tel and AOL UK.

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Our Comments

BT is still the largest broadband provider in the UK as it has several million business customers (in which Talktalk is certainly going to take a keen interest). But Carphone Warehouse and Talktalk is not far behind and this could turn nasty if it decides to take on Virgin Media as well.

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