Tiscali Buys Itself Some Time
The short term cash squeeze on Tiscali is over: Tiscali has managed to sell the Dutch operations to KPN for an approximate €255m Enterprise Value. The closing cash received by Tiscali will be dependant on the number of ADSL customers at close and bank borrowings.
Tiscali made the following comment about the Dutch Operation “…which is one of the most successful operations of the Tiscali Group but in a mature and highly competitive market”. My interpretation of this is that Tiscali feels that its potential in the Netherlands has peaked. The ECTU placed The Netherlands 2nd in the list of EU countries in terms of broadband penetration. However, I suspect the real reason is twofold:
• KPN have recently been hovering up smaller ISPs, (such as Thus, Speedling, CistroN and Freeler) and offered a good price; and
• The Dutch market looks as if it is entering a new phase of investment with Fiber to the Home projects being muted. My cyberbuddy, James Enck, has been banging on about this phenomenon for many months and more especially the feature of municipalities getting involved.
This cash allows Tiscali to support the UK’s growth and launch of Video on Demand services. More pressing questions will be how growth can be accelerated in the home market of Italy and more importantly will Tiscali take the decision to invest heavily in Germany to turn around the operation or will it be sold as well.
The lesson which Broadband ISPs in the UK should bear in mind is the Dutch experience: the wave of investment in LLU will be replaced by a wave of investment in Fiber to the Home projects which effectively could mean that decent returns on LLU investment will never be realised. This has always been the case in Telecoms and it is really noticeable that Vodafone who have surfed several waves in the wireless arena is taking an infrastructure light approach to Broadband. Vodafone must have looked at buying Tiscali before deciding to resell BT (UK) and FastWeb (Italy) services - I await with interest to see what Vodafone next step will be in the more mature market of the Netherlands and the less mature market in Spain.
Tiscali made the following comment about the Dutch Operation “…which is one of the most successful operations of the Tiscali Group but in a mature and highly competitive market”. My interpretation of this is that Tiscali feels that its potential in the Netherlands has peaked. The ECTU placed The Netherlands 2nd in the list of EU countries in terms of broadband penetration. However, I suspect the real reason is twofold:
• KPN have recently been hovering up smaller ISPs, (such as Thus, Speedling, CistroN and Freeler) and offered a good price; and
• The Dutch market looks as if it is entering a new phase of investment with Fiber to the Home projects being muted. My cyberbuddy, James Enck, has been banging on about this phenomenon for many months and more especially the feature of municipalities getting involved.
This cash allows Tiscali to support the UK’s growth and launch of Video on Demand services. More pressing questions will be how growth can be accelerated in the home market of Italy and more importantly will Tiscali take the decision to invest heavily in Germany to turn around the operation or will it be sold as well.
The lesson which Broadband ISPs in the UK should bear in mind is the Dutch experience: the wave of investment in LLU will be replaced by a wave of investment in Fiber to the Home projects which effectively could mean that decent returns on LLU investment will never be realised. This has always been the case in Telecoms and it is really noticeable that Vodafone who have surfed several waves in the wireless arena is taking an infrastructure light approach to Broadband. Vodafone must have looked at buying Tiscali before deciding to resell BT (UK) and FastWeb (Italy) services - I await with interest to see what Vodafone next step will be in the more mature market of the Netherlands and the less mature market in Spain.
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