Tiscali could be targeted by a number of ISPs, it has been speculated, as firms look to grow market share in the broadband sector.
Speculation is mounting that Tiscali’s UK division could be set for a takeover, having been put up for sale by its parent company months ago.
Since being put on the market in February, Tiscali UK has failed to find a buyer. In this time its owners have scrapped deadlines for the sale on several occasions. However, this week Tiscali confirmed in a statement that it is conducting talks with Sky over a possible deal - suggesting closure could now be imminent.
The official statement from Tiscali came after it Sky’s chief financial officer Andrew Griffith told delegates at a UBS conference that acquiring the company would fit in with Sky’s strategy for expansion in the UK and broaden the appeal of its service.
He said: "At the moment, we only address 9 million homes, so Sky broadband products - great value though they are - only speak to customers who are willing to take the TV offering.
"Something like Tiscali would allow us to extend our offering and our services in a scale industry to another 16 million households, and that potentially could have value.”
However, with the news this week that Tesco is also looking to expand its share of the broadband market, Sky could find it faces strong competition. Tesco’s ambitions in the sector have been made apparent by its recent announcement from chief executive officer Lance Batchelor. Mr Batchelor recenlty told the Independent that it is aiming to become the leading UK provider of bundled phone and broadband services and is targeting TalkTalk’s position in the market. A takeover of Tiscali would provide the perfect platform for it to achieve its ambitions.
He said: “We have looked at it and are considering [a combined telephony and broadband bundle]. A one line summary of my business plan is to be the leading telecoms player in the UK by any core metric, such as profitability, and that includes being bigger than Carphone Warehouse and Virgin.”
A takeover of Tiscali could have mixed consequences for consumers. It’s possible that the disappearance of an internet service provider could provide less impetus for the competition that has driven the improvement of services and price falls of the last few years. However, the demise of one company is unlikely to have a significant effect. What is for certain is that the winning company would enjoy a huge boost to their subscriber base, adding two million customers at a stroke. This would bring Sky up from the UK’s fifth-largest ISP to the third-largest, and swell its customer numbers to 3.6 million.
Existing Tiscali customers are unlikely to miss some aspects of the network, not least if Sky wins. This would most likely result in them being transferred to the Easynet network, which according to The Register is likely to be “a popular decision with punters”.