Business will suffer as Tiscali sell to TalkTalk

Carphone Warehouse took Tiscali for £236m earlier this month which will have an interesting impact on the industry. Working through the numbers I believe the value works out to be around £138 per user. It seems relatively good value when you consider the millions invested into the infrastructure and that most of this can be cut as it practically overlaps TalkTalk’s footprint. Most ISPs will put about £50 – £100 in client acquisition (not including network costs) so to get the network as well that is pretty good going. It will however in my eyes be their undoing and will cause a number of issues for the clients using the network.

The consumers don’t need to worry too much as it is easy to switch providers if service fails but for a business it is going to be tough. Apparently Opal will be looking after the business side of the operation, which is good news as they have a better reputation than TalkTalk, but realistically they aren’t going to cope. Firstly no extra investment will go into a network they are planning to turn off as they switch clients to their own infrastructure (to save costs and make the original deal work – the problems with investing in your own last-mile!). Therefore service will deteriorate. Combine with this the support and billing integration which has to happen and businesses will be in for a rough ride.

From my position the pain has been in the Tiscali offering for a good six months with a number of high profile customers already jumping ship. Move this forward to later this year when they start to transition and I can only see this exodus increasing as businesses realise that while intentions may be good their services are on a dying platform.

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