Italian ISP Tiscali has announced its intention to acquire the voice and broadband assets of Pipex Communications for about £210m, subject to Pipex shareholder approval and clearance by the Office of Fair Trading.

In a statement Pipex said that, “Following the disposal of the broadband and voice division, the group will consist of three divisions, namely web hosting, business services and Pipex Wireless (WiMax).”

Pipex’s product futures manager, Mike Greaves, added that the firm’s plans to roll out a national WiMax services are unaffected by the Tiscali deal.

Pipex Wireless has been running trials of WiMax in Milton Keynes, Warwick and Leamington Spa in partnership with Intel, National Grid Wireless and Ericsson. It also recently announced a strategic alliance with Nokia Siemens Networks. A commercial launch of the service is planned for later in the year in Manchester, using equipment from Airspan Networks based on Intel’s Rosedale WiMax chipset.

According to the Pipex Wireless web site, the provider aims to “offer hybrid services incorporating established services such as Wi-Fi at the access level with backhaul connectivity being provided via WiMax.”

While Pipex is continuing to target the enterprise market with its fledgling WiMax services, its withdrawal from the consumer voice and broadband arena could spark a feeding frenzy among rival service providers.

Neil Armstrong, products director at PlusNet, which was itself acquired by BT earlier this year, said, “Tiscali acquiring Pipex will create massive customer churn in the consumer broadband market. Pipex is ranked fifth for customer service by Uswitch and Tiscali ranked seventh.”

Ovum’s broadband technologies analyst Jonathan Coham said there would be a degree of churn, but added, “In the grand scheme of things I think what’s more interesting is the approach Tiscali will be taking in the long term.”

Coham said Tiscali could use the deal as a foundation for organic growth, with its recently launched IPTV service leading the way. Alternatively, it could use the deal “as a means of bulking up its market value and then flog itself off later on down the line”, he added.

If the acquisition is given the green light by the Office of Fair Trading, it will change the dynamics of broadband provision massively, according to Coham.

“Tiscali really is a wildcard in the market at the minute,” Coham said. “It’s pretty huge, with over two million customers. If it does sell up then one of the other players is going to get a massive addition to their market share, which will change the dynamics again. Tiscali is like a loaded gun – it’ll have a lot of influence in the next three to five years.”

‹ www.pipex.com ‹ www.tiscali.com