Tiscali talks break down over price forcing BSkyB to pull out

It has been announced that BSkyB has dropped out of recent negotiations with Tiscali, the struggling internet service provider (ISP) after discussions over the price broke down.

The sale of Tiscali began ever since its strategic review was launched in February but any deals have been constantly deterred by the price it is demanding. The company was initially valued at around £1.3 billion, however, due to the current economic climate and the recent losses as the market share of the firm dropped this value has grown smaller.

An argument in August over the company’s £600 million price tag which was reduced to £450 million in September caused Carphone Warehouse to end talks with Tiscali. Another similar disagreement over pricing saw Vodafone leaving the deal table this year and now the £350m valuation is being questioned by Sky.

Reports so far have said that Sky has completely pulled out of any talks with the provider and based on the recent drop in the number of broadband subscribers and the continuing poor performance of Tiscali, questions are now being raised regarding to reduced offer that BSkyB have put on the table.

With the benefits that an investment from BSkyB would have provided, the news will be quite a blow to customers of Tiscali. Having been on sale now since May 2008 and with the company servicing a constantly growing and more competitive market it seems unlikely that any further acquisitions will be risked by companies in the immediate future.

If BSkyB had been successful with its bid for Tiscali its broadband subscriber base would have increase by 1.8 million UK broadband customers from Tiscali and would have made it the third largest ISP in the UK with only Virgin media and BT in front.