Carphone Warehouse buys Tiscali for £263 million

After about a year of negotiations and will-they-wont-they speculation, Carphone Warehouse has finally snapped up Tiscali’s UK operations for a cool £263 million. This purchase means that Carphone has leapfrogged Virgin Media to become the second largest ISP in the UK, with some 4.25 million broadband subscribers.

More importantly, the buyout means that Tiscali customers, concerned that they may lose their connection can rest easy. It was thought that Tiscali had racked up debts of €500 million across the Continent, and rumours of the group going into administration had subscribers understandably worried.

Tiscali UK CEO Mary Turner said: “It’s good news for our customers who will increasingly benefit from a group that has consistently championed best value and award-winning customer service.”

Carphone Warehouse chief executive Charles Dunstone also said: “It has been the longest deal I have ever worked on. I think it has been hard for the shareholders of Tiscali because during the process we had the collapse of the banking world and then the decline in the pound to the euro so we think this price is low.”

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Virgin Media’s plans to do a BT with its fibre network

According to some ‘secret plans’ leaked in yesterday’s Guardian, quad play provider Virgin Media are apparently intent on opening up their fibre optic cable network to rival providers. The article details how the fibre provider has “plans to open up its cable network to rival telephone and broadband companies” in around 18 months’ time, loosely following BT’s Openreach template.

This move would see the likes of Sky, O2 and the Carphone Warehouse offer fast cable broadband services where available alongside their more traditional copperwire ADSL services.

BT is already busy setting up a fibre network of its own, which is not due to be complete until 2012. If Virgin Media were to open up their network before then, BT could in theory get its customers signed up to cable on the Virgin network, and then migrate them across to their own lines once the network is up and running.

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Carphone to buy out beleaguered Tiscali?

After reports of Tiscali falling into some serious financial difficulty, it has emerged that TalkTalk and AOL owners Carphone Warehouse are rumoured to be plotting a last minute takeover bid.

Carphone was once the frontrunner for a Tiscali takeover bid launched last year, which fell through at the last minute. Sky then stepped into the bidding war, stumping up £450 million for the Tiscali’s UK services, but again, negotiations deteriorated before a deal could be worked out.

Last September, a Carphone buyout of Tiscali would have seen its joint subscriber base swell to a massive 4.6 million, overtaking BT at the head of the British Broadband league table. A Sky purchase would have seen the satellite broadcaster become the third biggest ISP, with its customer base rising to 3.6 million.

Tiscali are some €500 million in the hole, and as the credit crunch continues to bite, the lenders of Europe are calling for their pound of flesh. After Tiscali revealed that its shares have been suspended on the Italian stock market following a 50 per cent tumble, it asked lenders to freeze debts in order to “allow a period of suspension for interest repayments and financial covenants,” according to a piece in the Telegraph.

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Tiscali buyout looks uncertain after shares suspended

Tiscali appear to be the first victims of the recession in the British Broadband Big 6, after its shares have been suspended on the Italian stock market after taking a 50 per cent tumble this morning after it was revealed that the group, which collectively owes banks €500 million, failed to meet a debt repayment.

Tiscali is currently the fifth largest broadband provider in the UK, with a subscriber base of around 1.7 million. Tiscali, who listed looking for a buyer for their UK consumer services as a top priority in 2008, were looking for at least £600 million. Among those interested in a buyout included TalkTalk/AOL owners Carphone Warehouse and Sky – the latter stumped up £450 million for Tiscali’s UK arm, but talks broke down, becoming “impossible to proceed,” according to Tiscali.

This means that Tiscali will be coming to the banks of Europe cap in hand, at a time when fiscal security is shaky to say the least.

‘Project Canvas’ Broadband catch-up venture to cost £24 million

The BBC, ITV and UK Broadband market leaders BT quietly announced the tentatively titled ‘Project Canvas’ last year – a joint IPTV-based venture which is intended to “bring catch-up from the PC to the TV” – which, according to the BBC Trust is set to cost backers a cool £24 million.

Project Canvas is aimed at providing Freeview and Freesat owners with a broadband connection access to a library of catch-up and on-demand programming on their TV screens, presumably following the IPTV model employed by BT Vision, the digital TV offering from BT, although the Canvas service will be altogether separate from BT Vision, as the service will be made available to anybody with a broadband connection, regardless of whose broadband services they subscribe to.

The Beeb, ITV and BT are all hopeful that the service will be up and running by the beginning of 2010, and hope to attract interest from other major partners, such as Channel 4 and Five.
Today the BBC Trust has launched a consultation into the BBC’s proposals that will be completed by 24 July this year, with the partners hopeful of launching Canvas on Freeview, the free-to-air digital terrestrial TV service, and Freesat, its digital satellite equivalent, in early 2010.

New set top box equipment will have to be purchased for the service, which was billed as ‘Freeview mark two’ by an unnamed source in yesterday’s Guardian.

The boxes plus set-up and connection fees, according to the BBC Trust could end up costing anywhere between £100 and £200, but as Project Canvas is an open platform, it is therefore open to all hardware manufacturers, and so installation and equipment costs would invariably fall as take-up increased. Freeview boxes, when they first came out, cost upwards of three figures, but are now available for as little as £10 from electrical retailers. The new receivers would all be HD Ready, and include interactive programme guides, and the ability to pause, record and rewind a la Sky+.

Sky hook in over £400m for Tiscali

Sky are all set to raise £450 million in a bond issue to institutional investors in order to stump up some massive coin which is allegedly earmarked for the acquisition of the UK tentacle of Tiscali.

Tiscali have recently confirmed that they have been in talks with Sky over a potential deal – the Italy-based ISP and telecoms outfit announced late last year that the long term goal for 2008 was to find themselves the right buyer.

It is uncertain whether or not the deal includes Sky taking over the Tiscali TV IPTV platform, on which there are already a number of Sky channels. If the deal goes ahead, Tiscali TV, which began life as Homechoice, could potentially be rebranded under the Sky Picnic name, in the event that a deal with Ofcom is worked out.

The move would not only see Sky leapfrog into third place behind broadband and digital TV rivals BT and Virgin Media and ahead of Carphone Warehouse, whose main broadband concern TalkTalk is also reportedly up for sale.

There are rumours that Sky are also interested in buying up TalkTalk along with Tiscali, but if this were true, then the satellite giant would probably need to dig a little deeper – the TalkTalk arm of Carphone’s business is valued at a cool £1bn.

Sky price hike for non-SeeSpeakSurfers

Sky Broadband Base (up to 2Mbps speed) has always been free to punters who bundled the broadband service with a Sky Digital TV subscription. However, come March 2009, the cost of the service will rise from £0 to £5 a month – but only if the customer doesn’t sign up for Sky Talk, the fixed-line call package.

This price hike is something of a moot point really; as Sky themselves say, Most of our Sky Broadband customers already take all three services and so the planned changes will have no impact on them at all. As a Sky Talk customer, you will continue to make the biggest savings on your Sky Broadband service with no change to your monthly subscription.”

The full list of changes, not due to take place until next March, is as follows:

Base – currently free rising to £5 (or free with Sky Talk)
Mid – currently £5 rising to £10 (or £5 with Sky Talk)
Max – currently £10 rising to £15 (or £10 with Sky Talk)

TalkTalk to split (from Carphone Warehouse)?

The Grande Fromage of TalkTalk and AOL owners Carphone Warehouse, Charles Dunstone has launched a “formal review of the group’s corporate structure” which could lead to the breakup of its telecoms division, which could potentially see TalkTalk becoming a fully independent ISP.

However, it is more than likely that usual suspects Sky, Vodafone, Orange, BT and the gang will be offered the chance to bid for the customer bases of both TalkTalk and AOL beforehand – TalkTalk is believed to account for some £1bn of Carphone Warehouse’s current £1.3bn valuation.

The BestBuy deal is said to be taking its toll on the group, and Dunstone is reportedly considering splitting the group in half, allowing for easier management of the retail arm of Carphone Warehouse.

“We recognise, however, that the structure of the Group may now no longer be appropriate for the optimal development of the two businesses,” said Dunstone. “The Board has therefore initiated a formal review of the Group’s corporate structure and capital requirements, which may lead to a separation of the two businesses. In this instance I would remain closely involved with both companies.”

This is a bit of an about turn for the company which, earlier this year, was thought to be the favourite to buy up the UK arm of Tiscali’s home broadband customers, a move which would have seen Carphone become the biggest ISP in the country. Now Sky are thought to be in negotiations to buy up Tiscali’s UK operations instead.

Virgin Media prepare to unroll ‘seismic’ 50Mbps broadband

Virgin Media are apparently on the verge on launching their next-gen 50Mbps service across their fibre network, following extensive tests and trials in Kent. An exclusive interview with gadget site TechRadar quotes Virgin Media’s Head of Broadband Paul Elworthy saying that the new product represents a “seismic” change in the way in which people use the internet at home.

Elworthy says that the new service will enable people to do more of the same, but much faster:

“We’ve seen an explosion in usage over the last couple of years and this is expected to grow. We believe that super fast broadband will be key in facilitating a richer online experience for our customers.”

The new service will benefit casual and heavy users alike – people will now be able to check emails, book flights and renew insurance simultaneously, and not have to worry about download queues clogging up connections.

“With a 50Mb connection you could download a DVD in a few minutes or a whole CD in seconds – it’s a downloader’s dream.”

Virgin are apparently hoping to make their 50Mbps service available to some 9 million broadband customers by the end of the year. This news comes just after the announcement that the missing Sky channels will be coming back to the cable TV platform, giving Virgin customers another good reason to be cheerful this Christmas.

Sky channels return to Virgin Media next Thursday

Sky and Virgin Media have just announced that, following successful negotiations, they have agreed to two new channel carriage deals, the first of which finally sees the return of the missing Sky channels to the Virgin Media TV platform next Thursday on the 13th of November – something of an early Christmas present for Virgin customers.

We can confirm that Sky’s Basic channels – including Sky1, Sky2, Sky3, Sky News, Sky Sports News, Sky Arts 1, Sky Arts 2, Sky Real Lives and Sky Real Lives 2 – will arrive on Virgin Media’s cable TV service, and in return, Virgin Media TV’s basic channels – Living, Living 2, Bravo, Bravo 2, Trouble, Challenge and Virgin 1 – will become a mainstay of Sky’s TV channel line-up on satellite.

Sky3, Sky News and Sky Sports News will be part of Virgin Media’s M TV package and therefore be available to all digital TV subscribers, with Sky1 and Sky2 will join Virgin Media’s L and XL TV packages. Sky Arts 1, Sky Arts 2, Sky Real Lives and Sky Real Lives 2 will make up the rest of Virgin Media’s XL TV package.

Living, Living 2, Bravo, Bravo 2, Virgin 1 and Challenge will be available to subscribers of Sky’s Variety pack of channels, with Trouble becoming available to subscribers to Sky’s Children’s pack.

The two deals are set to run concurrently until the 12th of June 2011, with agreements on carriage fees now fixed, with both channel suppliers able to secure additional capped payments if their channels meet certain performance-related targets.

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