Pipex who recently sold their voice and broadband operation to Tiscali, have publicly stated that they do not expect to see much more growth in the home broadband market due to increased competition between broadband providers and the UK’s declining broadband adoption rate.
The company has said it no longer wants to pay out more for customer acquisitions because it will erode their margins and limit the company’s potential to increase profits.
It is understood that Tiscali has the option to pull out of buying Pipex if Pipex’s customer base falls by more than 20% by the end of August 2007. These numbers are expected to be independently verified.
Pipex is expected to operate as a brand name for approximately two years after Tiscali has purchased the company (expected to be fulfilled in September 2007).
Analysts predict that Tiscali’s acquisition of Pipex will help it widen its lead over Orange and will give BT, Virgin Media and Carphone Warehouse (AOL and TalkTalk) greater competition. Tiscali will have a 15% share of the broadband market once the Pipex purchase is closed.