Carphone Warehouse has emerged as a potential suitor in the running for Tiscali, the Italian broadband operator that was put up for sale this week. A source confirmed last night that Carphone could be interested in Tiscali’s UK arm “at the right price.”

Tiscali said on Monday that it had hired JPMorgan Chase and Intesa Sanpaolo’s Banca IMI to evaluate strategic options aimed at boosting value for its shareholders.

Massimo Cristofori, its chief financial officer, has said that Italy’s broadband operator would evaluate any proposal but dislikes the idea of a possible break-up of its domestic and international operations.

Monday’s announcement boosted the company’s shares, which closed up 13 per cent as investors speculated that several of its peers, including Telecom Italia and Fastweb, could bid for the group’s British or Italian operations.

Others rumoured to be interested in Tiscali’s British unit, which accounts for two thirds of overall revenue, include BT Group and Sky, although a source at BT said last night that a bid was unlikely.

Carphone declined to comment last night. At the end of December 2006 it paid £370 million for AOL’s UK operation, adding 2.1 million broadband customers to its books. Tiscali has about 1.7 million UK broadband customers.

Market sources said that the British business could be worth £550 million to £650 million but that Carphone would be unlikely to bid if the price was too high. Thenews of Carphone’s interest comes amid speculation that Best Buy, the American mobile retail chain, could mount a bid for the group. Best Buy owns 3 per cent and has a joint venture with Carphone in the United States. Carphone has more than 200 stores in partnership with Best Buy and wants to lift this to 1,000 by 2009.

Tiscali’s 2007 net loss was €65.2 million (£51.4 million), half the €130.6 million loss it made a year earlier, boosted by strong revenue and a growing customer base. The company is the UK’s fourth-largest internet service provider after Virgin Media, BT and TalkTalk.

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