The possible sell-off of Tiscali’s UK ISP to BSkyB (NYSE: BSY) is off, leaving the Italian outfit seeking special dispensation on interest repayments from its bankers. The ISP/telco said Friday the a sale to Sky was now “almost impossible”, especially since the economy has worsened, Reuters reports.

Tiscali confirmed the Sky talks in November but negotiations between the two had already broken down in December on valuation disagreements, multiple news reports had said at the time. Tiscali did sell its international ISP business TINet to Italian companies BS Private Equity SpA and BS Investimenti SGR for €47 million in February, saying it hoped to offload Tiscali UK by the end of March.

Instead, it’s asking its banks “to allow a period of suspension for interest repayments ... and financial covenants”, Reuters said. That can’t come soon enough - Tiscali must make interest payments totalling €11 million on Wednesday and Friday, the report says.

Meanwhile, it looks like Sky’s broadband service is getting bundled with its popular, and already profitable voice service Sky Talk. Sky has quietly raised the cost of its broadband service by £5 across the board, alerting existing customers by sending them letters, and by posting the price rise on some internet forums. But Customers who opt for Sky Talk as well won’t be hit with the increase. Ovum Research notes, the price provides customers with a ‘gentle push’ towards a voice and broadband bundle, while the increase in broadband tariffs should raise overall average revenue per user for Sky by either pushing more customers onto Sky’s voice service or by increasing their broadband access bill by £5 per month.

• Tiscali Sells International ISP Biz For €47 Million; UK Sale Expected March