Carphone Warehouse's ISP unit TalkTalk will buy Tiscali's UK operations for GBP 236 million in cash, funded entirely from existing group debt facilities. Completion is expected by end of June. The acquisition will enable TalkTalk to realise annualised savings of GBP 40-50 million by March 2011, with the synergies expected to come from customer migration, network integration and simplication and billing integration. At this point, it is anticipated that the acquisition will enhance EPS for the current year to March 2010 by around 10 percent. Tax losses, estimated at more than GBP 200 million, will be inherited as part of this transaction. Carphone Warehouse made an informal offer of GBP 550 million in May last year, but it was rejected. Tiscali is the UK's fifth largest internet service provider, providing broadband and IPTV services to 1.45 million subscribers. It also supplies services to a reducing base of 300,000 dial-up and voice customers, and around a further 100,000 wholesale broadband customers. Tiscali's other assets include its business services division, principally serving SMEs. The acquisition is in respect of the entire issued share capital of Tiscali UK and as at December 2008, the gross assets of the business to be acquired were GBP 457 million and the profit before tax attributable to such assets was GBP 9.7 million in the year to December 2008. The acquisition will take the combined base to 4.25 millon broadband customers and establishes TalkTalk as the largest residential broadband provider in the UK, with over 25 percent residential market share.
