Tiscali chief says UK listing is strong option

Tiscali, the Italian telecoms services group, is considering listing its UK operations in London early next year as it looks to promote its TV and video on demand business over the coming 12 months.

The group, which is valued at nearly €1bn ($1.5bn) on the stock market in Milan, has spent the past year streamlining its business and moving from web access provider to full telecoms services provider.

Tomasso Pompei, chief executive of Tiscali, told the Financial Times: "We are having a few more meetings but [a London listing] is something we are considering very seriously."

The UK has become the dominant part of Tiscali's business following the acquisitions of Homechoice, and the voice and broadband assets of Pipex Communications, which it bought for £211m ($436m) in September.

Nine-month revenues of €395m in the UK were 64 per cent of total group revenue - almost twice as large as the Italian operations. Furthermore, the UK produces 54 per cent of profit against 42 per cent in Italy.

It also gives Tiscali a market share in the UK of 14 per cent, far better than its domestic market, where the domination of Telecom Italia means Tiscali has only a 6 per cent market share.

Mr Pompei admits there are few bid targets available to make a similar leap in Italy after Tiscali's failed bid for Tele2 this year.

Nevertheless, the Italian business's capital base has been restructured.

The Pipex deal, and refinancing of Tiscali's debt, was by a planned capital increase of €150m. As part of the deal, Management & Capitali, the turnround fund led by Carlo de Bendetti, the former chairman of Olivetti, fund will underwrite €60m euros of convertible bonds, equivalent to a 15 per cent premium over Tiscali shares.

Instead, Tiscali will announce today its latest plans to drive organic growth through digital pay TV in its main two regions.

In the UK, Mr Pompei aims to compete on price against incumbents Virgin and Sky. More than 70 per cent of customers take double play of phone and net access but Mr Pompei admits few take a third service.

"The only thing we don't plan to spend a lot of money on is sport. We're trying to develop an on-demand service, so we're looking for specific channels.

"Our targets are not likely to see a great acceleration in average revenue per user, more of an increase in users."

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