It was recently revealed that Carphone Warehouse may be among the potential buyers of Tiscali as the Italian broadband group re-opens talks to sell in UK broadband business.
Following much market speculation it “confirms the existence of negotiations for the disposal of its activities in the UK,” according to the group, which is the UK’s fifth biggest broadband business.
Negotiations with “a number of potential buyers” were ongoing with the Italian group, according to a source who was close to the talks. He said “It is likely they will now sell, but to whom remains unclear.”
Among those currently at the table in the current round is Carphone Warehouse, which operates under its TalkTalk brand for its broadband business, and in the past has expressed an interest in a deal.
After the collapse of talks with BskyB to sell its UK business last month the future of Tiscali was thrown into serious doubt.
The price being asked by Tiscali was considered to be too high by the broadcasting group, which is growing its UK broadband business steadily under Jeremy Darroch, and this was the reason for the breakdown in negotiations.
One rival said that with 1.8 million customers Tiscali had built up a strong UK presence, “although that is falling fast.” Last month Ernst & Young refused to sign off on its Italian parents’ accounts as it was hit with serious financial pressures. No opinion could be given on its financial statement for 2008 by Ernst and Young because of the fears over the company’s future.
Whether Tiscali can renegotiate its debts is the main reason for much of the current speculation over its ability to carry on operating as a going concern. A standstill agreement is in place until June with its lending bank, which may be increase up till the end of the year, according to the group. Negotiations to sell its UK arm were “in parallel with the debt renegotiation process” it recently added.
A source that was close to the current dealings said “This is a necessary step. Either it sells its UK business or the banks will probably walk in. They are looking to drum up an auction.”
