Tiscali is alleging that BT is trying to win over its customers using dirty tactics.
BT apparently sent out a letter to Tiscali broadband users warning that their service may be in doubt playing on rumours of a sell-off.
Tiscali has responded by threatening to take legal action.
The letter had the headline "Tiscali chief plots sell-off", reports say it was sent to customers of both Tiscali and associated ISPs including Pipex and Nildram.
"We can understand why you're wondering what might happen to your Tiscali broadband service", the letter reads. "And because no one really knows the answer just yet, it could be a good time to look for an alternative broadband service."
And BT may be one of the ISPs they could look at.
Tiscali is now taking legal advice, which may include investigating how BT got the contact details for its customers.