Sky Abandons Plans To Buy Tiscali

Sky has apparently abandonned plans to purchase its Italian rival Tiscali for around £450 million as it plans to close the gap between itself and the other two ISPs ahead of it, Virgin Media and BT.

The Guardian reported that Tiscali has been asking for £600 million for its UK business and is not prepared to hold out discussions for less.

Sky had been expecting to go ahead with the acquisition to reach around 3.6 million subscribers and compete with the two other broadband giants, Virgin Media and BT.

Tiscali has been on sale since May 2008 and Carphone Warehouse, BSkyB and Vodafone were amongst the potential suitors for the business although only BSkyB was left in the race.

Some might say that Tiscali is exhibiting clear signs of greediness - the Pound Sterling dropped 15 percent against the Euros in the last six months alone (Tiscali is based in Italy) and the company, initially valued at £1.3 billion, is now thought to be only worth a third of that figure.

Tiscali hasn't been doing too well having lost 37,000 customers from June to September and any potential bidder will have to solve the complex issue of integrating the various acquisitions that Tiscali completed over the years (Pipex, Freedom2surf, Homechoice).

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Our Comments

Just like Microsoft and Yahoo, chances are that potential suitors are waiting for Tiscali to wind up so that they can pick up the pieces for much less than the £340 per subscribers that Tiscali is asking at present. But Tiscali could still be hoping for the best as the Euro appreciates against the Pound Sterling.

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