04 November 2008

Tiscali says talks ongoing with BSkyB on UK assets sale

03 November 2008 - TotalTelecom

Italian operator confirms discussions after press reports claimed with satellite TV provider has made £450 million bid.

Italy's broadband operator Tiscali SpA said Monday it is in ongoing talks with British broadcaster British Sky Broadcasting Group PLC about some of its U.K. assets.

Tiscali's statement, issued at the request of market regulator Consob, partially confirms a report by the Sunday Times newspaper that said BSkyB has entered exclusive talks to buy Tiscali's U.K. assets after rival bidder Carphone Warehouse Group PLC walked away from the long-running auction.

News Corp., publisher of this newswire, holds a stake of around 39.1% in BSkyB.

BSkyB is understood to have lodged an indicative bid of about GBP450 million for the Italian company's U.K. operations, and the price may fall further after more due diligence, according to the paper. A BSkyB spokesman declined to comment on the news Monday.

Acquiring Tiscali's U.K. operations could boost the broadcaster's broadband offering to make it the third biggest player in the market behind BT Group and Virgin Media. At its last results announcement last week, BSkyB had 1.792 million broadband customers.

Tiscali shares, which had been suspended limit up earlier Monday following the report, jumped on Tiscali's statement and by 1340 GMT were trading up 28% at EUR0.87.

"BSkyB reported offer would value Tiscali at around EUR1 per share. That's good news for the company, since the sale process has been frozen for a while, but it is really far from the original prices we were talking about," said Milan-based asset manager Gianpaolo Rivano at GestiRe.

Tiscali was originally expected to fetch about EUR1.6 billion from the sale of the company, with the price tag for the UK business alone seen as being more than GBP500 million.

A possible BSkyB bid for Tiscali UK assets will most likely be viewed by the market as negative in the short term, as making acquisitions at this time is considered "bad," an analyst said.

However, he added, for a medium-term outlook on shares a bid would "makes sense," giving the British broadcaster further critical mass in broadband, which is a business based on volume. Other competitors who had reportedly walked away from the long-running auction included British giants Vodafone and BT.

Vodafone had been seen as the frontrunner earlier in the process, as the group was reportedly the only player interested in buying both Tiscali's UK and Italian broadband operations.

Groups interested in Tiscali's Italian operations are thought to include Italy's telecoms operators Wind and Fastweb SpA, while Telecom Italia has expressed interest in some of Tiscali's minor assets.


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