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Broadband sales negotiation talks collapse

Talks of a broadband deal between BSkyB and Tiscali have gone cold.

The halt in the negotiations, which looked set to make the satellite broadcaster BSkyB the third largest broadband provider, have stopped in their tracks over a price disagreement.

Tiscali, which is based in Italy, hoped to sell its UK broadband business to BSkyB for around £600m. This price was later reduced to £450m, but Sky reportedly believes this is still too much for a company which has recently been underperforming in the broadband arena.

Sky launched broadband two years ago, but cannot currently compete with the main UK broadband market leaders BT broadband and Virgin Media. Acquisition of Tiscali, however, would significantly boost Sky’s profile as a broadband provider, taking it above TalkTalk which is owned by Carphone Warehouse.

According to the Guardian, since placing itself up for sale, Tiscali has poured less money into its broadband advertising and promotional work. This has unfortunately devalued the business in a competitive marketplace. Previously, Tiscali had grown through a series of deals including the purchase of the TV-over-broadband player Homechoice.

If the figures are analysed (as quoted in the Guardian) Tiscali’s broadband subscribers have been on a tumbling decline during the latter half of 2008, with 1,774,000 customers at the end of September, down from 1,838,000 recorded at the end of June. Sky, in comparison had 1,792,000 customers at the end of September.

Tiscali has also been examined by several potential bidders including Vodafone and Carphone Warehouse. All have walked away.

22/12/2008
Author: CompareBroadbandUK staff writer

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