Broadband ISP Tiscali UK has threatened a broadband comparison site with legal action after it issued a press release remarking upon the provider's current financial predicament and directly urging consumers to switch ISP.
The situation follows news earlier this week that Tiscali's auditors, Ernst & Young, had refused to approve the ISPs accounts for 2008 because of "fundamental uncertainties" with the business. Naturally this has cast serious doubt over Tiscali's future.
Jessica McArdle, marketing manager at Top 10 Broadband, a price comparison website, says, "People are right to worry about the fortunes of their ISPs in the current climate. We urge concerned consumers to switch to broadband providers who can offer stability".
"The problems suffered by two high-profile ISPs suggests that more broadband providers could be hit in months to come. It's imperative that consumers and businesses keep a very close eye on their broadband provider - especially as the credit crunch worsens. Being without broadband is frustrating and can be a crippling blow for those reliant on it."
Understandably Tiscali UK was not best pleased with the sites press release, calling it "totally irresponsible" in a new statement, which warned that possible legal action could follow.. provided they can find some spare cash of course.
Tiscali Statement: "[Top 10 Broadband] have obviously not read our press information released yesterday and have issued this press release to drive traffic to their own website and for their own commercial gain. We are reviewing our legal position on this press release."
The release they refer to is one in which Tiscali UK took "disagreement with the conclusion drawn by the audit report". Sadly encouraging a mass exodus of customers from Tiscali, which they're quite capable of doing all by themselves, is only going to make the situation worse.. though customer concern is growing.
Never the less this doesn't change the fact that Tiscali's future may now rest on whether or not they can renegotiate their £450m debt repayment with the banks before June. There is still the possibility of a sale to consider, although this alone would no longer raise enough to plug the debt pile (rumours suggest that BSkyB's failed bid offered around £250/350m).
It is possible that Tiscali might end up in administration, at which point their broadband customer base would end up being sold off, probably for even less than they would have hoped for. We would hope that they can find a solution before then. But make no mistake, nobody buying Tiscali would want to see a big loss of customers and seek instead to maintain the service during any transition.
The comparison site concerned has now issued an apology to Tiscali for its remarks, although many still feel that what they said was only reflecting the thoughts of their customers:
Top-10-Broadband Statement: "We have spoken to Tiscali and agree with them that our press release might have caused unnecessary concern for its customers. We understand from Tiscali that its lending banks are continuing to support the company and any suggestions that customers could be switched off are speculative and unhelpful. We have apologised for this and retracted the release as this was certainly not our intention."
Meanwhile Tiscali itself has again reiterated that there "will be no impact on [OUR] broadband services and support of services will continue as usual." We should know how well that statement has held up by the autumn.
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