Tiscali Continues Aggressive Acquisition Policy - Company Business and Marketing

By Mark Holmes, mholmes@the-phillips-group.com

LONDON - Italian ISP Tiscali on Monday won the race to acquire a 73 percent stake in number two French ISP, Liberty Surf. The ISP acquired the stake from Europ@web and Kingfisher PLC as part of a deal worth around $614 million (650 million euros).

The deal ends months of speculation concerning Liberty Surf's future. Some industry observers had speculated that Belgian incumbent Belgacom was close to securing a deal for Liberty Surf.

"Tiscali has really started an aggressive consolidation strategy," Valentina Romitelli, a telecom equity analyst at UBS Warburg, told Communications Today. "However, I would say that Freeserve is a much better business relative to Liberty Surf. There are chances for them to become the leading ISP/portal in Europe. As of today, they have different positions in the markets where they have a presence. They are relatively strong in Italy and the Netherlands, but are weaker elsewhere.

There is a chance for them to build a stronger market position. However, what in my view is important to point out is that if you look all the acquisitions announced recently, there is a huge gap between the valuations to which these big listed companies trade and the price paid for these marginal players. That suggests there is huge valuation gap between leaders and laggards."

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