Tiscali’s debt concerns spiral as BSkyB buy-out fails

The UK division of internet service provider (ISP)  Tiscali is entering ever more dangerous waters after news a vital buy-out from BSkyB ( Sky Broadband) has failed.

It was previously estimated by Tiscali boss Mario Rosso that an acquisition from BSkyB would be finalised by the end of the month. Now, however, due to unforeseen market circumstances, the sale is being deemed “almost impossible”.

As a result, Tiscali’s shares have been suspended due to excessive losses following the collapse of the BSkyB buy-out. In an effort to stabilise its market position, the telecommunications group, whose UK ISP brands include Tiscali, Pipex, Freedom2Surf and Nildram, said it would now focus on renegotiating its loan agreements. Currently, Tiscali’s debts stand at an approximate €500 million (£458m).

Part of the problem for the unsuccessful deal has been blamed on the decreased value of sterling (GBP) - a drastic fall which has in turn lowered the face value of Tiscali’s UK business.

As a result of this latest set-back, there are growing concerns Tiscali’s broadband services won’t receive any cash injections in the near future. So, the danger is that in terms of performance and package features, other internet service providers could overtake the troubled business quickly, leaving customers with no reason not to look elsewhere for their broadband.