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Carphone buys Tiscali for £235m to claim residential top spot

08 May 2009 | 10.49 Europe/London

The deal is done. Carphone Warehouse has bought Tiscali’s UK assets for £235m which it claims makes TalkTalk the largest residential broadband provider in the UK with a combined subscriber base of 4.25m.

SamKnows queried TalkTalk’s maths, given that BT claims to have 4.6m subscribers. TalkTalk’s rationale, it explains, is that of these BT users 700,000 are believed to be business customers, giving BT around 3.9m home broadband users, compared to TalkTalk’s enlarged residential base of 4.25m. BT did not take the opportunity to comment on the figures or associated claim it is no longer in top spot for residential broadband.

The ultimate aim, TalkTalk reveals, is to grow the TalkTalk brand and so, although it says it is ‘too soon’ to say what will happen to the Tiscali name, the company would appear to be hinting it will be subsumed in to TalkTalk, although Tiscali customers will keep their email addresses.

The deal means that where there has been a special offer page on TalkTalk for the past month trying to poach Tiscali customers with three months of free broadband, there is now a welcoming note to all the customers it soon expects to take in to the fold.

The deal is now only subject to approval by EU competition, which is expected to be given within a month, paving the way for the acquisition to be completed before the end of June.

For Carphone Warehouse, the main reason behind the purchase was made clear by how CEO Charles Dunstone welcomed the news.

“In one step, it makes TalkTalk the UK's largest residential broadband provider with over 25% residential market share and a total of 4.25 million customers,” he commented.

Mary Turner, CEO of Tiscali UK, as one might imagine, welcomed the acquisition claiming that Tiscali customers would now become a part of the country’s biggest unbundled network and would “benefit from a group that has consistently championed best value and award-winning customer service”.

Interestingly, despite making the claim it is now Britain’s largest residential provider, TalkTalk clearly has an eye on the business market, pointing to Tiscali’s service for SMEs as a partial reason for the purchase. The announcement also mentioned Tiscali’s IPTV capabilities which will give TalkTalk the option of evaluating running video on demand entertainment across its enlarged network, although no firm plans have yet been outlined.

This combined ISPs, TalkTalk claims, will be have customers on a single platform within two years. By that time it claims that 80% of all its customers will be unbundled (meaning TalkTalk will control the line from exchange to the home rather than use BT’s network). Currently half of Tiscali’s customers are unbundled compared to 78% at TalkTalk.

This combining two players on to one network will bring with it, TalkTalk claims, an annual £40m to £50m saving on ‘synergies’. These will come through running two networks as one but also, one cannot discount, the possible loss of jobs where functions are replicated.