Tiscali has issued legal proceedings against BT after letters were sent to customers hoping to persuade them to join BT's broadband service amid rumours over its competitor's future.

Citing ‘defamation and malicious falsehood', Tiscali is reacting to documents that were circulated to its customers that threw the future of Tiscali's broadband service into question.

BT has denied the allegations, claiming that it was a ‘legitimate and reasonable business practice' to approach Tiscali's customers to tell them about its own benefits. It said that the move followed media reports that Tiscali was considering selling its broadband service.

As for how BT obtained customer details, it says ‘reputable external sources' were used.