Mobile retailer and ISP Carphone Warehouse is buying Italian ISP Tiscali’s UK operations for USD354m. The deal will make Carphone Warehouse the UK’s second largest broadband provider serving a total of 3.25m subscribers and put the company’s TalkTalk business in control of 25% of the UK market. This puts it ahead of Virgin Media but behind BT, which has 4.7m customers.
Analysts say the sale price is ?appealing? from Carphone’s perspective. They also predict that economies of scale will help increase TalkTalk’s profit margins. Carphone says the deal will increase its earnings by 10% over the next year.
Debt-ridden Tiscali was previously in talks with BSkyB about selling its UK arm, but negotiations broke down earlier this year.
Shares at Carphone Warehouse rose 6% in response to the deal, while Tiscali’s rose 4%. Carphone Warehouse says it plans to split its retail and TalkTalk businesses in the near future.
StrategyEye's related categories: Device Retailers - Mobile Phones, ISPs - Wired
StrategyEye's related companies: BSkyB, Carphone Warehouse, Tiscali
