Carphone plans to invest some of the £1.1 billion from Best Buy in developing its fixed line broadband operation, fuelling speculation the company will buy Tiscali’s UK arm.
Tiscali has been a take over target for a number of companies, including Carphone over recent months.
The purchase of the Italian ISP’s UK arm would see Carphone challenge the dominance of BT in the UK broadband market. Integrating Tiscali into Carphone’s existing broadband business would take the company’s market share up to roughly 30%.
A spokesman for Carphone today told Mobile the company wasn’t ruling out the acquisition of Tiscali.
The Best Buy deal only covered the retail side of the business, with Carphone retaining full control of its telecoms arm, which the company is looking to channel a significant share of the cash to.
Shaun Collins, analyst at CCI Insight said: ‘The deal [with Best Buy] allows Carphone to release value from mobile and increase value in broadband. It’s interesting that they use money from mobile for broadband, and that Best Buy didn’t invest in that.’
One of the reasons for taking some of the money on the retail side of the business to the telecoms side, Collins said, could be that Carphone expects more growth in fixed line broadband than mobile this year. ‘I think they see big growth in broadband,’ he added.
CCI Insight estimates the growth of the mobile market to remain flat or in single figures for the year, while there is more untapped potential in broadband.
Furthermore, it seems unclear where third party distributors sit with the networks, Collins said, but pointed out that it doesn’t mean that Carphone wouldn’t remain a significant player in the mobile market.