Tiscali, the Internet service provider headquartered, somewhat improbably, in Cagliari, the capital of the Mediterranean island of Sardinia, and a would-be (but failing to be) Top Three player in the UK Internet access market has reluctantly admitted that its continues to haemhorrage customers and lost a further 37,000 British subscribers over the course of Q2 of this year.
The company, that makes 69 per cent of its total turnover from its UK operations, also reduced its profits and revenue forecasts for the whole year and is to "review" its business plan for Q4.
Tiscali put itself up for sale back in March of this year but its worth has been decreasing ever since. Shareholders are worried that the Tiscali board set the sales price at far too high a level in the first place and the company has signally failed to attract a buyer.
The latest reductions in the profit forecast down to €220 million from the €290 million promised earlier together with the downgrading of revenues targets from €1.3 billion to €1 billion will serve only to make a sale even harder to negotiate.
Sources say Tiscali did have several suitors but they melted away like ice cream under the Sardinian sun when the ISP refused to lower its evidently over-aspirational sale price.
It is certainly a known fact that Vodafone was interested in getting its hands on Tiscali's UK and Italian operations and that Carphone Warehouse and BskyB wanted the British business. However, they walked when the Tiscali board played hardball.
UK subscribers have been deserting Ticali in droves and the company has garnered a woeful reputation for poor customer service. The departure of the latest 37,000 broadband subscribers to vote with their feet means that Tiscali now has 1,838,000 customers and falling. It seems likely that, unless something radical is done - and very quickly too - Tiscali will soon lose its current ranking as Britain's fourth-biggest ISP, probably to BSkyB.
For, as Tiscali slides, BSkyB (part-owned by Rupert Murdoch's News Corporation) is on the up-and-up. The company, that delivers TV and Internet access services via satellite, added a further 200,000 new customers to its rolls over the same quarter and now has 1,638 subscribers.
In a statement, Tiscali bleats that "higher competitive pressure" is causing the trouble. Well, the remedy to that state of affairs is in its own hands.
Among the factors that are pushing subscribers away from the company is its so-called "unlimited broadband package" that is anything but.
Tiscali has is known to have effectively throttled the web access of individual users under the terms of unilaterally imposed "Fair Usage Policy" that can result in access being "capped at peak times". Many subscribers have been angered by this and have churned away from Tiscali as soon as they could do.
Then there was the little matter, in May last year, when Tiscali's free email service was bombarded with so much spam that the service collapsed.
Many of the company's customers were not compensated for the prolonged outage on the grounds that the service was a free add-on to the Internet access service. Tiscali's attitude caused a lot of bad feeling and the issue was sent to arbitration. Nonetheless, customers felt they had been shabbily dealt with and that Tiscali's wriggling was no more than sharp practice. More subscribers left as a result
Then, more recently, Tiscali was, controversially, involved in doing a "three strikes and you're out" deal with the record industry that would have resulted in filesharers being disconnected fro m the Internet. However, the proposal fell apart in an row over money.
Tiscali's weekend statement addressing its latest woes adds, “In view of the developments within the business environment and the strategic review process still underway, Tiscali’s Board of Directors intends to review the Business Plan in the fourth quarter of this year" and that "the weakness of the pound against the euro and changed conditions in the broadband market" are other factors affecting corporate performance.
That's as maybe - but the fact of the matter is that Tiscali's share price has fallen by more than 30 per cent over the past year.
Meanwhile Tiscali's broadband access rivals in Britain are doing well. BT leads the market with 4,500,000 subscribers - an increase of 103,000 in Q2- whilst Virgin Media now has 3,836,100 punters - up by 54,000. And Carphone Warehouse, added a further 44,000 users, to bring its total broadband customers up to 2,754,000.
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