TalkTalk is to become the UK’s largest broadband provider following takeover of Tiscali’s UK operations.

TalkTalk, the wholly owned subsidiary of the Carphone Warehouse Group PLC, is to acquire Tiscali’s UK operations for £236 million.

Italian-owned Tiscali is the UK’s fifth largest internet service provider, with over 1.45m customers. The acquisition will make TalkTalk the UK’s largest residential broadband provider with 4.25m customers, giving them a 25% residential market share.

In April 2009, TalkTalk became the fastest-growing home phone and broadband specialist with 97,000 new customers secured in the previous quarter. The company turned itself around following a barrage of customer service problems when demand for its services exceeded delivery.

Charles Dunstone, CEO of Carphone Warehouse Group PLC, said: “We are delighted to be acquiring Tiscali’s UK business – we know the business well and the fit with TalkTalk is perfect.
 
“It also delivers clear shareholder value with significant enhancement to this year’s earnings per share and substantial synergies to be achieved next year and beyond.”

The share price of Carphone Warehouse rose by more than 2% following the announcement.

Mary Turner, CEO of Tiscali UK commented: “It’s good news for our customers who will increasingly benefit from a group that has consistently championed best value and award-winning customer service.

“The combination of TalkTalk and Tiscali will offer our customers, both residential and business, Britain’s largest and best fully unbundled network.”

Completion is expected by the end of June 2009, upon approval from EU competition authority and subject to Tiscali obtaining formal approval pursuant to its debt restructuring plan.    

Carphone Warehouse previously announced its intention to demerge its mobile phone business and TalkTalk, although the timing of the split was not specified.