Critical list: Tiscali

What a tangled web the Sardinia-based ISP has woven since the glory days, when it was one of Europe's biggest internet providers. Surfing the Noughties wave of economic prosperity and the massive growth in broadband use allowed Tiscali to expand into 15 countries. But even before the recession kicked in, it became clear that the firm had bitten off more than it could chew. When Carphone Warehouse stepped in to pick up the pieces in April, only the UK and Italian operations remained, and Tiscali was on the brink of collapse, with debts of more than £500m that it could not service.

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Last Updated: 31 Aug 2010

Danger signs - Founded by Renato Soru after the deregulation of the Italian telecoms market in 1998, Tiscali gradually lost its early-mover advantage as deeper-pocketed rivals picked up steam. Once properly out of the blocks, the likes of BT, Sky and Virgin quickly outpaced Tiscali in Britain. A series of acquisitions, including Pipex, bought for £210m in 2007, followed, but to no avail. When Tiscali put its UK business, employing 750, up for sale last spring, debts were spiralling and it was trailing fifth in a market where only the biggest beasts could prosper. Having rejected an initial offer from BSkyB said to be around £350m, talks with the Murdoch-owned firm dragged on as the recession deepened, failing in March. Tiscali was left high and dry, with customers deserting its chaotic service and investors threatening to mutiny. Bankruptcy loomed as shares were suspended, while bosses begged the firm's banks not to pull the plug.

Prognosis - Then along came Carphone Warehouse's Charlie Dunstone, whose well-timed offer let him snap up Tiscali's 1.75 million UK subscribers (plus a modest £20m of debt) for just £236m. Carphone's TalkTalk division became Britain's largest residential broadband provider, with 4.25 million subscribers. Tiscali UK runs as a discrete unit while Dunstone's team works on integration and the Italian parent - with 1.2 million users and high debts - tries to sort its finances out.

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