Carphone set to land Tiscali with £250 million bid

CARPHONE Warehouse was today poised to finalise its £250 million bid for the UK broadband business of troubled Italian group Tiscali.

The deal expands Carphone's presence in the home internet market as it seeks to take on BSkyB and BT - both said to have been rival bidders for Tiscali.

Its Talk Talk home internet brand is to be spun off from the main company, creating two separately listed outfits.

Charles Dunstone, the Carphone founder, plans to be chairman of both firms raising questions from investors about whether he is spreading himself too thinly.

As speculation mounted that the Tiscali deal was imminent, the Italian firm's shares were suspended in Milan pending an announcement. Carphone shares moved up 4p to 162p.

Tiscali made a loss of £51 million this year as its financial position worsened. It has been haemorrhaging customers for sometime, but remains the fourth largest UK internet service provider after Virgin Media, BT and Talk Talk.

Analysts say the deal is a reputational risk for Talk Talk, given Tiscali's problems with customer service.

Users have often complained that there is very poor levels of support when service is disrupted.

Earlier talks between Tiscali and BSkyB collapsed. The internet company had originally put its UK arm up for sale at about £500 million.

Carphone bought AOL's UK arm for £370 million in December 2006.

Dunstone has led the company through several reincarnations in the last 20 years as he moves it away from being a simple mobile phone retailer towards becoming a modern telecoms outfit to rival BT.