It took a matter of days for Tiscali, the Italian Internet service provider, to remind investors that the acquisition binge it kicked off last year is still alive and kicking in 2001.

This week it was the turn of LibertySurf, France's second biggest Internet service provider, to join Tiscali's network. The deal follows 13 acquisitions last year, including Dutch ISP World Online, which have helped transform it from a small Sardinian Internet company into a heavyweight of the European industry.

Renato Soru, chairman, gave every indication that there were more deals to come, despite the diminishing number of worthwhile targets. "Europe is a single market; my aim is to be number one in Europe," said Mr Soru. "We will look for opportunities in markets where we are not in a top three position, like the UK and Germany.

"There are not many targets left, so we may also grow naturally or with smaller deals."

The LibertySurf deal makes Tiscali the second-biggest ISP in Europe behind T-Online, the Internet arm of Deutsche Telekom, which has about seven million users. Tiscali will have 4.7 million "active" users, putting it slightly ahead of France Telecom's Wanadoo, which bought UK company Freeserve last year.

In terms of subscriber numbers the wave of deals looks promising. But some analysts question the value of the network Tiscali is creating in an industry where being the biggest in each individual market attracts the biggest share of advertising and e-commerce on the Internet.

Tiscali will not be the leader in any individual market, not even its native Italy.

One analyst says: "It is a viable way to go forward. I'm just not sure it is worth a great deal. You will never get the same rating as the leaders in the biggest countries. With the top four markets controlled by ISPs owned by telecoms companies, it is just going to get harder."

Mr Soru disagrees. He believes Tiscali's independence from a telecoms operator is an advantage, allowing it to become a telecoms company itself by offering voice calls over its European network without competing against a parent company. "The real advantage of not having a telco is we don't have legacies to defend," he says. He also believes Tiscali can develop its Interent portal to generate revenues from e-commerce and advertising on the Web, instead of relying on simply connecting users.

Portal revenues accounted for only 5 per cent of Tiscali's €274 million revenues in the nine months to September 30th. But the company hopes that LibertySurf's greater expertise in the area - it makes more than 20 per cent of its revenues from its portal - will help push Tiscali's offering forward.

In addition, Mr Soru believes the bigger Tiscali gets, the more attractive it becomes as a partner for media companies wanting to put their content on the Web.

Either way, it looks like Mr Soru's strategy of treating Europe as a single entity and trying to become the biggest is the best option available.

Tiscali says the €650m LibertySurf deal will accelerate its move into profitability, partly through the €80 million synergies from the integration of Tiscali's existing operations with LibertySurf's businesses within and outside France.

It is expected to make the company cashflow positive by the end of this year.

LibertySurf also brings with it about €260 million of cash, more than offsetting the €200m cash Tiscali has included as a sweetener to its mainly paper offer. This is on top of the €1.6 billion war chest Tiscali inherited through its acquisition of World Online.

Europ@web, the Internet investment fund controlled by Bernard Arnault, and Kingfisher, the UK retail group, which each own 36.5 per cent of LibertySurf, are getting a fraction of the riches they would have hoped from their ISP investment. Having hit a high of €75 in March, yesterday's deal valued LibertySurf's shares at about €7.10 each.

But Mr Soru revels in the turbulence, which has also hit Tiscali hard, saying: "It doesn't bother me. It probably helped in allowing us to make this deal."

However, now Tiscali has taken a place at the top table of European ISPs, the challenge is for it to prove that its vision can make money.