Friday, May 15, 2009

TalkTalk to Aqcuire Tiscali - Is it a credit crunch bargain?

Carphone Warehouse announced that later this year, after gaining EU competition clearnace, , will be take over Tiscali's 1.45m UK broadband and 300,000 dial-up customers and put them under their TalkTalk brand. This deal is expected to be completed by end next month (June)

With this takeover, TalkTalk will become the a powerhouse in broadband business, placing it in the first place when it comes to residential and second place (behind BT) when considering retail and residential allthogethr. TalkTalk will have an approxiamte 25% market share of the broadband business in UK.

This deak is expected to create significant synergies and could result in the reduction of operational costs. These benefits are expected to provide significant shareholder value and expected to boost 2009's earning per share. According to the CEO of Tiscali, Mary Turner, this deal was a very good one especially for Tiscali customers., however it is thought that the same couldn't be said about shareholders. In fact TalkTalk is said to be buying Tiscali for around £236m which is less than half the earlier bid made by TalkTalk itself earlier on last year. Last year's bid was rejected by Tiscali as it valued itself at more than £1bn however the ecomonic climate left it's signs on Tiscali who saw it's customer base and revenue declining.

Vodafone, BT, Swisscom and Italian mobile network Wind also considered buying Tiscali's UK business, however TalkTalk finally had the best deal. What do you think about this you consider deal as a credit crunch bargain for TalkTalk?

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