BT has agreed to buy TalkTalk out of administration in a £400 million rescue deal, securing continued service for the struggling broadband operator's 2.5 million customers.
The telecoms giant confirmed it is poised to take over TalkTalk's broadband consumer arm, as well as its wholesale arm, PlatformX Communications (PXC), which holds contracts with the emergency services and the government.
Government intervention under Enterprise Act
Culture Secretary Lisa Nandy said she had taken urgent action under Enterprise Act powers to intervene in BT's acquisition of TalkTalk, warning of concerns that any collapse of TalkTalk "could cause sudden disruption to vital phone and broadband services, putting lives, public services and vulnerable customers at risk".
She added: "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."
"These are unprecedented circumstances that require action now. That is why I am acting with urgency to ensure that impacts on public health, critical national infrastructure and supply to vulnerable customers are fully considered as part of this process."
Deal subject to regulatory review
The deal will now be subject to a regulatory review given BT and TalkTalk are close rivals. TalkTalk, once a major player in the broadband market, has been battling to survive despite revenues of £1.2 billion a year. It still serves more than 2.5 million customers – 1.5 million residential and one million wholesale.
BT said the deal would "protect continuity of service for its 2.5 million customers, avoiding the risk of material harm to vulnerable customers and key emergency services."
Administrators at Alvarez & Marsal Europe said the sale will see all 900 employees at TalkTalk's consumer and broadband business and PXC transfer to BT as part of the deal.
BT chief: 'Genuinely unprecedented situation'
Allison Kirkby, chief executive of BT Group, said: "This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed. BT is the digital backbone of the country, with a presence in every postcode."
"We have been connecting the nation for generations, stepping up in the moments that matter, and BT acquiring TalkTalk is now the only viable option to keep millions of customers connected and supported."
"Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk. Once the regulatory process has been concluded, TalkTalk's customers will benefit from access to the UK's best network, and the full range of market-leading products and services that BT offers. And, over a period of time, the transaction will create value for all our stakeholders – customers, colleagues, the country, and our owners."
