The news follows the Italian-based company's €18m (£11.3m) takeover of Inicia, another Spanish ISP, from Spanish publishing company Prisa in August.
If the deal goes ahead, Tiscali's Spanish ISP interests could pose a serious threat to Spain's biggest ISP, Terra Lycos, a division of Spanish telecoms firm Telefonica.
BT bought Arrakis in early 1999 for €13.8m (£8.6m) when it had 40,000 users. The company had as many as 300,000 users at the beginning of this year, according to a report in Spain's financial daily newspaper Expansion.
Tiscali's aggressive expansion plans have seen it buy a series of European ISPs in recent months including LineOne, WorldOnline and French company LibertSurf.
It recently rebranded its UK operation, which included LineOne and WorldOnline, under the Tiscali banner.
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