Carphone Warehouse (CPW) has secured the future of Tiscali after shelling out £236m in cash to acquire the UK operation on a debt free basis, creating a powerhouse in the residential broadband market.
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In November, BSkyB emerged as a potential suitor to the ailing Anglo-Italian Internet service provider but the deal fell through and the company appeared to be on the brink of administration when accountants Ernst and Young warned Tiscali would need to cease trading unless it could re-negotiate debts.
However CPW which already looked at the business - the UK's fifth largest ISP offering broadband and IPTV services to 1.45m users - came back into the frame and today snapped it up.
"In one step, [the deal] makes TalkTalk the UK's largest residential broadband provider with over 25% residential market share and a total of 4.25 million customers," said Charles Dunstone, CEO of Carphone Warehouse Group.
The transaction is expected to complete by the end of June and Dunstone said it will lift earning per share by 10% in the current year to March 2010.
Other assets include the business services division that has been locked into a price war in the SME market with BT.
The acquisition includes the entire issued share capital of Tiscali UK Ltd and gross assets of the business - as of December - were £457m and profit before tax pertaining to those assets was £9.7m in the year to December 2008.
The deal will help TalkTalk realise savings of £40m to £50m by March 2011 said CPW coming from billing and network integration and simplification, and through migrating customers onto a single unbundled network.
The move was "good news for our customers" said Mary Turner, CEO at Tiscali UK, offering consumers and businesses "Britain's largest and best fully unbundled network".
Keith Humphreys, managing consultant at EuroLAN, agreed that the deal would give some assurances to users but it could even more beneficial to BT.
"Tiscali has been in a state of flux but the real winner is BT, its good for BT Retail because two bad customers are merging and its good for Open Reach because it will go through local loop unbundling," he said.
As for the channel, when CPW separates its retail and business divisions, resellers could operate as its extended sales force in the commercial market, he added.