UK solution for Tiscali?

Chris Forrester

There is still a strong possibility that troubled Italian broadband outfit Tiscali could find a UK buyer for its British interests. Both Carphone Warehouse and BSkyB are reportedly again to be interested – despite both companies having previously walked away from negotiations.

The difference this time around is that Tiscali’s position is even more precarious, with its bankers already having restructured its debt payment obligations, and now keener than ever to see cash come into the business and thus keep the Italian operation afloat.

Tiscali said in a statement late on Friday “The board believes conditions exist for a positive outcome on debt-restructuring talks with banks.” Along with that news comes the company’s latest numbers, which amplify its predicament. Tiscali’s losses increased 73% year-on-year, to December 31 2008, to €242.7m ($322.6m). Losses included €96.4m in financial charges and €64.9m in taxation. Revenue was up 11.4%, ending the year at €983.6m. The company reported a 7.4% rise in revenue from its Italian operations to €313.5m and a 12.3% increase from its UK business to €683.6m. ARPU for its Italian customers rose to €30/month in 2008, but fell to €28 for customers in the UK.

Tiscali ended 2008 with net debt totalling €601m, down from €637m a year earlier. The company confirmed it has reached a standstill agreement with its creditors until June 2009, giving the company time to negotiate a new financing plan. The deal anticipates €60m of debt being converted to equity.