Analyst update on Tiscali

Interesting note seen from analysts Cazenove about the potential for Tiscali's acquisition and their view on how the UK broadband market will consolidate in the near term.

They believe that Tiscali is the only meaningful target left for acquisition after the expected sale of Pipex over coming weeks - and if you look at it then, they're right with BT, Virgin Media, Carphone Warehouse, Sky and Orange (France Telecom) being the only other players of any size.

They are narrowing down the chasing pack to 3 leading contenders:

• France Telecom - experiencing LLU delays and would drive good economies of scale, LLU wise.
• Virgin Media - Fits in with their offnet strategy, and would give IPTV services to non cable customers.
• BT - To protect wholesale revenues.

Given the strategic assets (i.e. LLU & IPTV) and the customer base of Tiscali (1.4m according to ISP Review), Cazenove are expecting a significant auction for the operation and are advising investors to buy stock.