Tiscali and Video Networks: integration in the UK market

Cagliari, London, 12th August 2006 - Tiscali and Video Networks International Ltd announce today that they have reached an agreement whereby their respective UK market operations would be fully integrated.

Pursuant to this agreement, Video Networks International Ltd (VNIL) would contribute 100% of their UK operations - Video Networks Ltd (VNL) - into Tiscali UK Ltd, fully owned subsidiary of Tiscali SpA, in exchange for an interest in Tiscali UK. As a result, Tiscali SpA would control 88.5% of Tiscali UK, while VNIL would own 11.5%. The agreement is expected to become effective in August 2006, upon fulfillment of certain technical conditions.

Furthermore, the shareholding of VNIL in Tiscali UK could be increased to up to 20% if certain performance targets are reached. Tax losses carried forward would also be contributed to Tiscali UK by VNIL at a discount and payable on a deferred basis and according to their expected utilisation in the future. Tiscali SpA has the right to acquire and VNIL to sell VNIL's stake in Tiscali UK starting from three years after closing or earlier upon certain trigger events.

Following this integration, Tiscali UK will immediately have more than 1.3 million DSL customers, of which 350,000 customers are taking voice and broadband, over 45,000 will be IPTV subscribers, and an unbundled local loop ("ULL") network covering over 300 BT exchanges with in excess of 220,000 ULL customers.

Video Networks currently provides TV and video services under its Homechoice brand, to its broadband subscriber base using its state of the art IPTV platform. Homechoice has 45,000 customers, mostly taking triple play (broadband, telephone and TV) which pay on average £500 a year. VNL has an annualised turnover of approximately £18 million.

To read more click on Press Release (pdf)