Customers leave Tiscali for cheaper deals on broadband

As customer leave Tiscali in order to take advantage of better deals from rival provider, the UK operator has been hit with a second consecutive drop in its broadband customer base in its first quarter for the year.

Over the first three month up to March 31st the company had around 1.7 million customers on broadband according to its latest financial results. Compared to its December 31st 2008 figures this is a drop from 1.768 million subscribers.

Between last years third and fourth quarter the operator saw 6 000 of its customers leaving, which means that over these financial periods Tiscali has seen two falls in its customer base consecutively.

This latest news comes following an agreement for rival broadband provider Carphone warehouse/TalkTalk to buy Tiscali with £236 million as the buying price. The completion date for the deal is expected to be June as long as regulatory approval is given.

The cheap broadband specialist TalkTalk will see a boost in customers with its subscriber base rising to 4.25 million customers, which is the equivalent of 25 percent of all homes in the UK, from this transaction making it the second largest provider of broadband in the UK.

It is expected that Carphone will now concentrate on using the cost-saving synergies that it has already identified in an attempt to turn the struggling company around. Amongst these cost saving initiatives will be “efficiencies associated with backhaul, the core network and individual exchange costs” and a single billing system, which should save between £40 and £50 million according to forecasts from the retailer.

The short-term retention of its customers may, however, prove hard for TalkTalk to achieve. A number of broadband operators have been attempting to get Tiscali customers to switch providers by offering money-saving incentives following the news of the takeover.

Customer of Tiscali are being offered a £90 Sky+ set-top box and a £50 voucher by Sky to change providers, although customers must sign up before 11th June to qualify for this offer.