Internet service provider Tiscali has business plan rethink after losing UK customers
The Italian owner of internet service provider Tiscali has reduced its sale and profit forecasts after announcing lost British customers over the past three months.
Tiscali's failure to attract and retain customers means Sky could overtake the company to become Britain's fourth-largest ISP sometime this quarter.
The move is likely to increase pressure on the management of the company to reduce their expectations of what it is worth.
"In view of the developments within the business environment and the strategic review process still under way, Tiscali's board of directors intends to review the business plan in the fourth quarter of this year," the company said.
Based in the Sardinian capital of Cagliari, Tiscali has been up for sale for the past six months, but a succession of bidders have walked away because the price tag is too high.
Tiscali had hoped to conclude a sale by the end of June but that ambition collapsed when Vodafone counted itself out of the bidding. BSkyB and Carphone Warehouse have also both gone cool on making an offer.
Last month, Italian rival Fastweb, controlled by Switzerland's Swisscom, was seen as the most likely buyer of the business.
In Britain, Tiscali has built itself up by buying a series of businesses including Pipex and HomeChoice, the broadband TV operation. But it has been losing out to Sky and BT in the battle to win customers.
The company admitted today it lost 37,000 customers over the three months to end June and now has 1,838,000.
It reported a first-half net loss of €57.2m (£44.9m), down from €73.4m last year, but dropped its outlook for revenues for the full year to €1bn-1.1bn from last year's forecast of €1.3bn.
The company said it expected profits before financial charges to be €220m-230m, well down on the €290m it had originally forecast. The company blamed the weakness of the pound against the euro and "the changed conditions in the broadband market and telecommunication services in general" for the reduction in its targets.
Broadband connections in Q2
1. BT4,500,000 (+103,000 customers)
2. Virgin Media 3,836,100 (+54,000)
3. Carphone Warehouse (TalkTalk/AOL) 2,754,000 (+44,000)
4. Tiscali 1,838,000 (-37,000)
5. BSkyB 1,628,000 (+200,000)
6. Orange 1,063,000 (-44,000)
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