| Tiscali Going, Going, ?Gone |
| Friday, 17 April 2009 01:15 |
Renato Soru built an Internet empire from Sardinia and was personally worth over $4B during the boom. Today, FT writes, “Like a dazed boxer struggling to pick himself up off the canvas, Tiscali is begging the referee to let it keep fighting. Shares of the Italian broadband company fell by half last month after takeover talks with BSkyB, a UK rival, collapsed. They h ad just recovered when Tiscali’s auditors on wednesday refused to sign off on its year-end accounts, saying they had doubts about the company’s ability to survive as a going concern. ... Cash, meanwhile, is shrinking fast. The company started 2008 with €134m but had just €37m on hand by year-end.”
Tiscali still has nearly 2M customers in Britain, and will presumably merge with either Sky or CW, both of which have made offers lower than Tiscali wanted to accept. Running out of cash and losing customers, they will probably have to choose one shortly. The financial problems have led to rumors (firmly denied) that customers might suddenly lose service, which will cost them customers. Few companies recover after a “going concern” warning from their auditors. In retrospect, Tiscali moved too late into unbundling and voice. The former meant costs were high, while the latter meant revenues were lower. Recently, they have skimped on backhaul and service, with low ratings on ThinkBroadband. I have previously projected reduced retail competition in Britain given the unwillingness of OFCOM to hold down backhaul and other input prices, with Sky, Virgin, BT, and CW dominant. Telefonica/O2/Be is doing well in both ratings and customer counts, and if the parent continues to accept losses may join them.
|
| Last Updated on Friday, 17 April 2009 01:47 |