Tiscali Agree to Sell to Carphone Warehouse for £236M

[Justin]

It has this morning been confirmed that Carphone Warehouse, operators of TalkTalk, and Tiscali UK have agreed a deal which will see Tiscali become part of Carphone Warehouse.

Subject to the deal being approved, all current Pipex Homecall, Nildram, Freedom2Surf, Toucan and Bulldog customers will be under the ownership of Carphone Warehouse.

The Carphone Warehouse and Tiscali S.p.A. (MI:TIS) have reached agreement for TalkTalk to acquire Tiscali’s UK operations for a total cash consideration of £236 million, funded entirely from existing Group debt facilities.

Completion is subject only to EU competition authority clearance and Tiscali S.p.A. obtaining formal approval pursuant to its debt restructuring plan. Completion is expected by end of June 2009.

Charles Dunstone, CEO of Carphone Warehouse Group PLC, said:
“We are delighted to be acquiring Tiscali’s UK business - we know the business well and the fit with TalkTalk is perfect. 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. It also delivers clear shareholder value with significant enhancement to this year’s earnings per share and substantial synergies to be achieved next year and beyond. We very much welcome Tiscali’s UK customers and staff to TalkTalk. Together we intend to continue leading the way in UK broadband.”

Tiscali is the UK’s fifth largest internet service provider, providing broadband and IPTV services to 1.45m subscribers. It also supplies services to a reducing base of 0.3m dial-up and voice customers, and around a further 0.1m wholesale broadband customers. Tiscali’s other assets include its business services division, principally serving SMEs. The acquisition is in respect of the entire issued share capital of Tiscali UK Limited and as at December 2008, the gross assets of the business to be acquired were £457m and the profit before tax attributable to such assets was £9.7m in the year to December 2008.

Mary Turner, CEO of Tiscali UK, said:
“We are delighted to become part of TalkTalk. It’s good news for our customers who will increasingly benefit from a group that has consistently championed best value and award-winning customer service. Internet use continues to grow very rapidly with customers expecting to enjoy an ever increasing diversity of content. The combination of TalkTalk and Tiscali will offer our customers, both residential and business, Britain’s largest and best fully unbundled network. The enlarged TalkTalk is perfectly positioned to meet and anticipate these demands.”

Since 2003, TalkTalk has built a leading position in the UK telecoms market, with over 2.8m broadband customers. Today’s acquisition will take the combined base to 4.25m broadband customers and establishes TalkTalk as the largest residential broadband provider in the UK, with over 25% residential market share. The acquisition will enable TalkTalk to realise annualised savings of between £40m and £50m by March 2011. In particular these synergies will come from:

Customer Migration
Approximately 50% of Tiscali UK’s broadband base is unbundled today, compared to 78% of TalkTalk’s existing base. Within 24 months, it is expected that over 80% of the enlarged TalkTalk Group will be on a single, unbundled network, and this will produce significant savings.

Network Integration and Simplification
Significant cost benefits can be gained by creating one integrated and simplified network. In particular, this will enable efficiencies associated with backhaul, the core network and individual exchange costs.

Billing Integration
TalkTalk expects to migrate the Tiscali customer base onto its own existing billing and customer relationship platform over the next 24 months.

Full Press release:
http://phx.corporate-ir.net/External...R5cGU9Mw==&t=1

[Antonio_f2s]

To find out more information and to answer any of your questions please
go to www.talktalk.co.uk/tiscali.

[Justin]

Thanks, I'll add this to the news article also.

[anansi]

so guys, what do you think has been the biggest change that has happened so far of out of this merger of Tiscali and Carphone Warehouse? Will there be new innovations that will benefit us consumers? Just wondering...