TalkTalk reported revenues of about £1.2bn over the past 12 months and is loss-making. Photograph: Neil Hall/ReutersView image in fullscreenTalkTalk reported revenues of about £1.2bn over the past 12 months and is loss-making. Photograph: Neil Hall/ReutersBT to buy broadband supplier TalkTalk, saving 900 jobsUK’s fourth-biggest broadband provider has been seeking a buyer for several years
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 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.
Read moreHer department said it was acting under Enterprise Act powers, allowing Nandy to consider the wider public interest once the Competition and Markets Authority has reported back by 19 October on any competition concerns raised by the tie-up.
BT said the deal will “protect continuity of service for its [TalkTalk’s] 2.5 million customers, avoiding the risk of material harm to vulnerable customers and key emergency services”.
It said it expected to report a £400m cash hit from the deal in its current financial year, comprising transaction and administration costs, working capital, as well as a £60m trading loss and £100m in uncollected Openreach revenue.
Allison Kirkby, the chief executive of BT, 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.”
TalkTalk, which is the UK’s fourth biggest broadband company, 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.
The deal with BT ends Dunstone’s prolonged efforts to sell TalkTalk, although the agreement is expected to trigger a regulatory review over the coming weeks.
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.
