BSkyB Eyes Tiscali To Become Third Biggest Broadband Player

Murdoch-owned BSkyB is in acquisition mode as reports say that it could acquire embattled Italian broadband company Tiscali fairly in a £450m deal fairly soon, making it the third biggest broadband provider in the UK behind Virgin Media and BT.

VIrgin Media has around 3.8 million customers while BT has 4.5 million broadband users.

Sky Broadband has only be launched in 2006 and went on to reach its first millionth customer by October 2007. As of October 2008, the company reported 1.79m customers, although a substantial proportion was on Sky Broadband Basic 2mbps package.

Rupert Murdoch has already hinted at a USD 5 billion war chest that has been put on the table for News Corporation to acquire rivals or strategic assets and BSkyB could possibly benefit from it.

Vodafone and Carphonewarehouse were also amongst companies willing to acquire BSkyB but the current financial turmoil has all but pulled them out of the contest with Carphone Warehouse's £550m bid being turned down altogether.

The Sunday Times (which is owned by News Corp.) which reported that the deal might include Tiscali's HomeChoice IPTV service as well.

It is understood that Sky will leverage any new acquisition to boost its Sky TV core user base, something which is increasingly becoming urgent as Sky reported a higher than expect churn rate which approached 11 percent.