TISCALI CONTINUES BUYING SPREE, ACQUIRING ISPS IN GERMANY, U.K.

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ROME -- Italian Internet giant Tiscali has bought two mid-sized Internet service providers in Germany and the U.K. -- the two large European countries where Tiscali is weakest -- and the company says it will reorganize its operations in Germany to produce two separate companies.

The company also surprised observers by saying it would turn a profit by the end of this year, more than a year ahead of previous estimates.

In Germany, Tiscali acquired the Internet subsidiary of Viag Interkom, the German wireless unit owned by British Telecom. In Britain, Tiscali will take over ic24, which is owned by U.K. newspaper company Trinity Mirror.

The two acquisitions were numbers 14 and 15 for the Sardinia-based company since January 2000, a buying spree that has helped it become the second largest Internet service provider in Europe in terms of its 4.9 million member client base, trailing only Germany's T-Online.

According to Italian media reports, Tiscali will pay Trinity Mirror around $36 million in stock for the company's nearly 250,000 clients. Though less information was available about the purchase of the Viag Interkom unit, a Tiscali spokesman says the deal will add "several hundred thousand new clients" to the Tiscali fold.

Though Tiscali is huge in pan-European terms, it is not a market leader in any of the 16 countries where it has operations, and its market share in its home country is only third. Company chairman and founder Renato Soru has said that the company's goal is to be among the market leaders in individual markets and not necessarily No. 1.

"We aim to become one of the three largest Internet service providers in all important European markets," Soru said. In Germany, Tiscali is currently No. 4 and it is the sixth largest ISP in the U.K.

The company will continue to eye acquisitions in Germany, the U.K. and Spain, according to local media reports.

Tiscali also said that it would restructure its German unit, splitting Tiscali GmbH into a Munich-based operation that focuses on private customers, while Dreirich-based Tiscali Business GmbH will concentrate on corporate clients.

Copyright March 2001, Crain Communications Inc.

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