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Tiscali chief plots sell-off

Succumbing to cheapskate fatigue

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Tiscali customers and employees can look forward to more turmoil in the next two years. The Italian-owned group's boss Tommaso Pompei says he's expecting to sell up to rivals as it struggles to compete with richer players in the broadband market.

Up until now, Tiscali has been a predator in the ISP consolidation game, snapping up Pipex customers and IPTV outfit Home Choice. That's set to change soon, Pompei told the Financial Times today, predicting a second wave of takeovers that he expects to be part of - as prey.

He insisted that Tiscali is not for sale, but said the ongoing squeeze on margins makes the firm vulnerable. Its share price slid 20 per cent last year.

The comments will be viewed by the industry as a call for takeover approaches. There are no ongoing negotiations at the moment, Pompei said.

Carphone Warehouse seems a natural suitor in the UK, standing in third place for customer numbers behind BT and Virgin Media and ahead of Tiscali, Orange and Sky. Carphone is the only member of the top six - who control almost 95 per cent of the broadband market - to lack a television offering.

Pompei said his primary aim is to turn a profit this year; a feat Tiscali has never achieved in its ten-year history. In the UK, the goal has meant customer lines being migrated to its unbundled network infrastructure to cut the cash it pays BT Wholesale to resell IPStream ADSL access. It also fired hundreds of Pipex's UK call centre staff soon after it bought the firm's broadband business.

The unbundling effort has meant other ambitions, such as its IPTV project, have been sidelined. The last company results showed TV subscriptions falling and forced a PR offensive to set new aggressive targets.

UK subscribers have been feeling the impact of Tiscali's attempts to save money this week through other cost-cutting initiatives. It botched a software upgrade aimed at reducing its bandwidth costs. The ongoing cockup has cut customers off from many internet services and slowed others to sub-dial-up speeds. ®

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