Carphone buys Tiscali UK operations

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TalkTalk-owner Carphone said the takeover would give it 4.25 million broadband subscribers and seal its position as the UK's biggest residential broadband provider.

The deal raises hopes for stricken Italian group Tiscali, which is said to be on the brink of collapse, and had seen previous attempts to sell its UK business fall through.

Carphone said Tiscali's customers would continue to receive uninterrupted phone and broadband service, while their email addresses would remain the same.

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.

And the group was dealt a further blow last month after it said its auditors had refused to sign off its accounts, warning of "fundamental uncertainties" on business continuity.

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

Carphone - which is splitting its retail operations from the TalkTalk broadband division - hopes the takeover will allow it to make annual savings of £40 million to £50 million within two years.

It will also give the group a quarter of the residential broadband market, according to Carphone.

Charles Dunstone, Carphone Warehouse founder and chief executive, said: "In one step, it makes TalkTalk the UK's largest residential broadband provider with over 25% residential market share and a total of 4.25 million customers. We very much welcome Tiscali's UK customers and staff to TalkTalk."