Italian ISP Tiscali confirmed plans to merge its UK operations with Video Networks, owner of TV, broadband and telephony player HomeChoice.

Video Networks International, majority owned by Microsoft millionaire Chris Larson, is to contribute 100 per cent of UK operations in exchange for an 11.5 per cent interest in Tiscali UK. As a result, Tiscali will maintain control of the remaining 88.5 per cent of Tiscali UK, with an option for the shareholding of Video Networks in Tiscali UK to be increased to up to 20 per cent if certain performance targets are reached.

The move will give Tiscali more than 1.3 million DSL customers in the UK, of which 350,000 are taking voice and broadband, over 45,000 will be IPTV subscribers, and an unbundled local loop (ULL) network covering over 300 British Telecom exchanges with 220,000 customers.

HomeChoice has around 45,000 customers, mostly taking triple play (broadband, telephone and TV) with revenues per users coming in at around £500 per year. Video Networks has an annualised turnover of approximately £18m.

With the addition of IPTV services, Tiscali will be better placed to compete with a multi-play offering including voice, data, television and other on-demand video services. Tiscali UK’s strategy will also be to enhance its current wholesale DSL product by adding IPTV to the proposition and syndicating this on a white label basis.

“The triple play offer in the UK will be launched by the end of the year and will be immediately followed by the launch of the service in Italy and then in the other markets.” says Tommaso Pompei, chief executive of Tiscali Group.