Homechoice and Tiscali engaged to be married?

Triple-play provider Homechoice and ISP Tiscali are on the verge of announcing a merger, according to press reports.

Homechoice, which is owned by Video Networks, will reportedly take shares in Tiscali, creating a business worth at least £500m.

The addition of Homechoice will bring an extra 45,000 customers to the Italian-owned ISP which is thought to have around 1.2 million broadband subscribers of its own. Tiscali describes itself as the country's third largest DSL ISP although recent research from broadband analysts Point Topic puts them fourth among UK ISPs behind BT, NTL:Telewest and AOL.

Tiscali said in a statement: "Tiscali confirms that there are ongoing negotiations with Video Networks, a company operating in the UK market under the brand Homechoice, regarding a possible agreement through its fully owned subsidiary Tiscali UK. Tiscali will inform the market shortly of the outcome of the negotiations."

Video Networks did not immediately respond to a request for comment.

Ian Fogg, analyst at JupiterResearch, said: "Homechoice is not one of the stronger companies out there. This is being driven by their need to get some new investment or a buyer in and it's an opportunistic thing for Tiscali... They don't need the Homechoice customer base. They'll be looking at it for the technology, the platform and the expertise in the TV space."

Tiscali was the subject of speculation earlier this year when it was rumoured it was to be acquired by either Vodafone, which is now looking at reselling DSL, or O2, which has since bought ADSL2+ ISP Be.

UK broadband has been a hotbed of consolidation and M&A activity in recent months, with BSkyB, NTL and Telewest, and Thus all piling in. The bedhopping hasn't finished yet it seems - AOL's UK operations are up for sale, with BSkyB and Carphone Warehouse rumoured to be interested.