Shares in Tiscali, the Italian internet provider, rose 10 per cent this morning on reports it has set a deadline for non-binding bids for the company.

Sources close to the deal have identified May 5 as the first deadline for expressions of interest, although Tiscali has not commented on the rumour. Speculation is now mounting about who will bid, with six names believed to be interested.

Early trading boosted shares by 10.5 per cent to €2.32, giving the company a market value of about €1.3 billion (£1.05 billion).

Charles Dunstone, the chief executive of Carphone Warehouse, yesterday confirmed that he will look at a bid for Tiscali’s UK broadband arm. However, he insisted that disappointing fourth quarter figures reported yesterday which revealed that his Acton-based company had added fewer broadband subscribers than expected, would not push him to make an early pitch.

A successful acquisition would boost Carphone’s 2.7 million broadband customers to 4.4 million, leapfrogging it ahead of BT’s 4.25 million and Virgin Media’s 3.7 million to make it the UK’s No 1 internet service provider.

BT has also been mooted as a possible contender for Tiscali's UK business, while industry sources believe Vodafone and BSkyB, in which News Corporation, parent company of The Times, has a 39.1 per cent stake, could be in the running for both the Italian and UK interests. Press reports have also named Italian groups Telecom Italia and Fastweb as contenders.

Analysts have said that if Tiscali tries to sell itself as a whole, two or more buyers may jointly purchase the group and then split the UK and Italian activities.

Renato Soru, Tiscali’s largest shareholder, who holds a 25 per cent stake, has said that he would expect an asking price of €3 to €3.3, which would give shares a premium of up to 43 per cent.

In a note to clients in which it confirmed its “outperform” recommendation, the Italian bank Mediobanca said: “The deadline suggests that the company is accelerating on its timetable. We wonder if bidders will get close to Mr Soru’s ‘ask price’ of about €3.0 to €3.3 per share.”

Based on the rumoured €700 million to €900 million valuation for Alice France, Telecom Italia’s French unit that is up for sale, the broker estimated that Tiscali would be worth €2.29 to €3.18 per share.

In a note this month, Jonathan Groocock, telecoms analyst at Investec, put an estimated £425-£510 million price tag on the Italian ISP, based on a valuation of £250 to 300 per broadband subscriber.

The Cagliari-based company has already sold assets across Europe to cut losses and focus on Britain and Italy. Last month, it hired financial advisers Banca IMI and JPMorgan to advise on strategy.

Tiscali, the UK’s fourth biggest ISP, is holding a shareholders’ meeting on April 29.

At 1pm shares were up 9.7 per cent at €2.3.

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