Tiscali / Video Networks

Italian internet firm Tiscali said yesterday it will merge its UK operations with privately owned Video Networks International to increase the content it provides to its clients.

Video Networks, which offers TV, broadband and telephone services under the Homechoice brand, will contribute its British operations in exchange for 11.5 per cent of Tiscali UK, and may increase the stake to 20 per cent if profit targets are met, Tiscali said.

The agreement allows Tiscali to become a "triple play operator" in the UK, offering broadband, telephone and television to its clients, Tiscali chief executive Tommaso Pompei said.

The move comes as competition heats up in the UK broadband sector, with companies like BT, NTL and BSkyB vying for dominance by offering a bundle of services, putting Internet firms like Tiscali under pressure. Tiscali has a 10 per cent UK market share, behind BT, NTL and AOL.

(c) Reuters