READ MORE
Former state-owned telco monopoly BT Group has bought TalkTalk's consumer and wholesale businesses out of administration, rescuing services used by 2.5 million customers.
BT says it acquired TalkTalk Telecommunications Limited and PlatformX Communications Limited on a debt-free basis. It expects a total cash impact of approximately £400 million in its current financial year, including the acquisition consideration and other costs.
BT said it stepped in after a prolonged sale process failed to find a buyer for the consumer and wholesale operations. TalkTalk reported approximately £1.2 billion in revenue over the past 12 months but was loss-making.
Separately, TalkTalk Business and UK technology services biz ARO announced plans to merge in August.
The UK Department for Digital, Culture, Media and Sport (DCMS) said a collapse could disrupt emergency calls, hospital communications, and medical alarms.
DCMS Secretary of State Lisa Nandy stated: "Phone and broadband services are vital national infrastructure. If TalkTalk services fail, there is a genuine risk to life and public services – including to hospitals, schools, and emergency care."
Nandy issued a Public Interest Intervention Notice under section 42 of the Enterprise Act 2002, allowing her to consider the wider public interest alongside competition concerns. The Competition and Markets Authority (CMA) must report to her by October 19.
BT says the businesses will operate separately and continue to compete pending the regulatory review.
Kester Mann, director of consumer and connectivity at FDM CCS Insight, said: "Given BT's strong position in the broadband market, it will inevitably also evoke scrutiny from regulators keen to ensure a fair and competitive playing field. This is even more relevant coming just days after competition authorities raised serious concerns over nexfibre's planned acquisition of Netomnia."
Last week, the CMA provisionally identified competition concerns in wholesale fixed broadband services over nexfibre's proposed acquisition of Substantial, Netomnia's parent company.
This has all the characteristics of a stitch up masked as a rescue deal in the public interest
BT Group chief executive Allison Kirkby said of the TalkTalk deal: "This is 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."
Clive Selley will lead the stabilization and integration planning with immediate effect. Martijn Blanken takes over his role as CEO of BT International.
Mann noted: "The deal cements a painful decline for one of the UK's most established and well-known broadband providers. With a clear value-for-money proposition, it should have been thriving amid continued concerns over the cost of living.
"But it failed to respond sufficiently to a fast-changing and increasingly competitive market, became burdened with debt following a buyout in 2021, and regularly suffered with poor perception over service. Its demise should serve as a stark warning to any value-focused telecom provider." ®
Updated to add at 1244 UTC:
A Virgin Media spokesperson got in touch – suffice it to say, competitors are less than pleased: “This has all the characteristics of a stitch up masked as a rescue deal in the public interest. Just days after the competition regulator proposed potentially blocking a logical deal between nexfibre and Netomnia that would accelerate fibre investment and create a genuine, financially sustainable challenger to Openreach, it now appears that rules might be watered down so the incumbent can roll its tanks over competition and further tighten its grip on the market.
“The logic simply doesn’t add up. We don’t believe rules should be thrown out the window to allow TalkTalk to fall into BT’s lap without a proper process and we will be raising our concerns directly with government and regulators.”
