Italian communications company Tiscali is continuing to expand its British broadband business with the acquisition of the consumer broadband and voice division of Pipex for £210 million. Tiscali has also appointed Italian company Telsey to provide set-top boxes for its broadband television service.

The Pipex deal will give Tiscali nearly two million broadband customers in the United Kingdom. The sale follows a strategic review of the business announced in March which also attracted interest from broadband rivals such as BT, Sky and Virgin Media. Pipex will now focus on its corporate clients, hosting business and the commercial launch of its WiMAX services.

The acquisition will be financed through a 650 million euro debt facility that will replace substantially all outstanding financial debt of the Tiscali Group. It reflects continuing consolidation in the competitive broadband market, notably with the acquisition of the AOL internet access business by Carphone Warehouse for £370 million.

Tiscali now operates in over 800 telephone exchanges, reaching 55% of UK homes with plans to extend this network to over 1,000 sites covering at least 65% of the addressable market. Tiscali has also rolled out an extensive next generation high bandwidth network to support both its business customers and new national television service.

“The acquisition of Pipex’s broadband and voice division further cements Tiscali’s position as a fully integrated telecom and media operator in the top league of the UK market,” said Mary Turner, the chief executive of Tiscali UK.

Tiscali has selected Telsey to provide hybrid set-top boxes in two versions for the Italian and UK markets. They will enable both broadband television services and off-air reception of digital terrestrial television through a single interface. The Telsey FS600 set-top box supports high-definition television and MPEG-4, based on a single-chip architecture. One model will provide a twin-tuner digital video recorder, placing it in direct competition with the BT Vision offering.

“We are sure that Telsey, with its expertise and product quality, will be in the position to accompany Tiscali in the best possible way of offering an innovative and cutting-edge IPTV service,” said Andrea Bosio, the president and chairman of Telsey.

Tiscali is expected to roll out a national broadband video service, following its acquisition of the Video Networks HomeChoice service in London. The company has appointed Dr Stephen Upton, the chief executive of the Farncombe Technology consultancy as its interim director of technology operations to support the roll out of its network. He was previously managing director of the networks division of NTL.

Tiscali is positioning itself to take on the television market just as Virgin Media is struggling to take on Sky. Virgin Media could now be up for sale and could even lose its Virgin identity under possible new owners.