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May 8, 2009

Carphone Warehouse picks up Tiscali UK arm

Cash deal pushes number two up nearer to BT

By CBR Staff Writer

Ailing broadband firm Tiscali is to sell its UK operations to Carphone Warehouse in a £236 million cash deal that will take the customer base of the residential broadband provider to 4.25 million subscribers.

Tiscali, which has about 1.7 million UK broadband customers, saw its shares suspended in March after BSkyB pulled out of lengthy takeover talks over the UK arm. Vodafone had also previously shown an interest in the business.

Tiscali said the deal with Carphone would enable itse Italian parent group to continue with its rescue plans.

The Carphone Warehouse Group PLC, which will run Tiscali’s UK operations through its TalkTalk broadband subsidiary, said the acquisition is expected to be immediately earnings enhancing for the current year to March 2010.

The addition of Tiscali UK to its business will produce £40 to £50 million of annualised network and other synergies to be realised by March 2011, in addition to tax losses of more than £200 million.

The transaction should close by end of June. Charles Dunstone, CEO of Carphone Warehouse Group PLC, said of the deal, “It makes TalkTalk the UK’s largest residential broadband provider with over 25% residential market.” The company competes in the UK against market-leader BT and Virgin Media.

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The company is in the process of splitting its broadband interests from its retail operations, and has just also announced plans to expand its UK retail base, opening between 30 and 40 new stores this year.

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