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BT has agreed to buy the broadband supplier TalkTalk out of administration in a rescue deal that will save 900 jobs. The company said it had struck a deal to acquire TalkTalk and its wholesale business PlatformX Communications (PXC) on a debt-free basis, in a move that is expected to cost it £400m. The deal, which will add a further 1.5 million UK retail broadband customers at BT , will trigger a regulatory review by the Competition and Markets Authority (CMA).
But the secretary for digital, culture, media and sport, Lisa Nandy, intervened on Monday after the acquisition was confirmed, citing risks to public services and vulnerable customers if TalkTalk’s broadband services were disrupted. Her department said it was acting under Enterprise Act powers, allowing Nandy to consider the wider public interest once the CMA has reported back by 19 October on any competition concerns raised by the tie-up. BT said it expected to report a £400m cash hit from the deal in its current financial year, comprising transaction and administration costsand working capital, as well as a £60m trading loss and £100m in uncollected Openreach revenue.
Allison Kirkby, the BT chief executive, said it was “a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed”. “Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk.” She said Nandy’s intervention reflected the “critical nature of the services that this industry provides and the scale of impact TalkTalk would have had if it had gone into liquidation and failed as an entity”. Kirkby added that it was “too early to conclude” whether BT would maintain the TalkTalk brand, but that for now nothing would change for customers of the UK’s fourth-biggest broadband company and there was “nothing they need to do differently”.
TalkTalk has struggled in a highly competitive telecoms market, with its retail customer numbers dwindling from 4 million in 2019 to about 1.5 million this year. Its founder, Charles Dunstone, engineered a £1.1bn deal with the London-based hedge fund Toscafund in 2021 to take the company private, which saddled the business with debt. Since then it has, in effect, been under the control of its lenders, led by the US private credit group Ares Management. skip past newsletter promotion after newsletter promotion The deal with BT ends Dunstone’s prolonged efforts to sell TalkTalk.
Administrators at Alvarez & Marsal Europe said the sale would transfer all 900 employees at TalkTalk’s consumer and broadband business and PXC to BT. BT is the biggest broadband provider in the UK, with a market share of about 30%, according to estimates by Enders Analysis. Openreach, the broadband network owned by BT, is also TalkTalk’s biggest supplier.
BT can expect to add a further 1.5 million broadband customers as a result of the deal. The companies will operate separately and continue to compete until the regulatory review is over, BT said in a statement. TalkTalk, which is headquartered in Salford, reported revenues of about £1.2bn over the past 12 months and was loss-making, BT said.
Source: The Guardian
