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Tiscali acquires broadband & voice assets of Pipex

Tiscali, the Italian internet service provider, has acquired the broadband and voice assets of Pipex Communications, the UK telecoms group, for about £210m. The sale follows a strategic review of the business announced in March. It had attracted interest from broadband rivals such as BT, Sky and Virgin Media, but most dropped out of the auction. Pipex will now focus on its three remaining divisions, which include web hosting, business services and WiMax wireless services. Hopes for a deal were reignited in May when Massimo Cristofori, Tiscali’s chief financial officer, admitted his company was at a “very preliminary stage” in exploring a Pipex deal. Tiscali has about 1.4m broadband customers in the UK, but some analysts have argued it will have to increase its size if it is to survive in the competitive high-speed internet access market, which is rapidly merging with voice services. This week BSkyB showed it was quickly capturing market share in the broadband and telephony market, reporting a 56 per cent jump in broadband customers, to 716,000, in the last quarter. Pipex’s broadband and voice division generates about £230m in sales, and profits of almost £14m, says Pipex executive chairman Peter Dubens. ‘Over the past three years, Pipex has successfully transformed the scale and quality of its broadband and voice customer base,’ he said. ‘In the consolidating UK market, this announcement crystallises value for shareholders and ensures that Pipex’s customers will continue to receive competitive, high quality services.’ Pipex believes it will benefit from focusing on other areas, which have shown significant growth in recent years. Web hosting has generated 90 per cent customer growth, while the business services division has seen growth in high-end hosting and leased-line sectors. Pipex Wireless is also focusing on the commercial launch of the business later this year. During 2008, commercial WiMax services will be made available in a number of cities as the network expands in the west midlands and the northwest.

 

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