TalkTalk is racing to secure its future as it nears administration, with deals to sell its consumer and broadband arms in the final stages as it seeks to protect 900 jobs.
The telecoms company said on Friday it was close to concluding transactions to sell its consumer business and its wholesale operation, PXC. “The company expects to conclude both transactions imminently,” TalkTalk said.
Struggling market position
Founded in 2003 by Charles Dunstone as a subsidiary of Carphone Warehouse, TalkTalk is the UK’s fourth-largest broadband company. It has struggled in the highly competitive telecoms market, with customer numbers falling from 4 million in 2019 to about 1.5 million.
The debt-laden business is near a £100m deal to sell its consumer operation to Opus Broadband, and to sell PXC to Octopus Investments for an undisclosed sum.
Protecting customers and jobs
A spokesperson for Opus said: “[Our] top priority is to ensure that every customer stays connected and that all TalkTalk employees’ roles are protected.” Octopus Investments declined to comment.
Karen Egan, a telecoms analyst at Enders Analysis, told the BBC: “I’d be surprised if there is real disruption for TalkTalk customers if the deal with Opus goes ahead. They would take over the running of the operations I would expect.
“They may look to move the customers to their own platform but I’m sure [the industry regulator] Ofcom would be focused on that being a very smooth transition, especially given that around 250,000 of TalkTalk’s customers are deemed to be vulnerable.”
Financial impact and government work
If the cut-price deals go through, TalkTalk’s owners, including Dunstone, will have to write off about £1bn in debt.
PXC works with the Ministry of Defence, although the sale process is unlikely to interrupt its services. It is understood that work with the MoD is through a third-party reseller, not PXC directly, and that regulations mean there is always at least one other telecoms company to prevent disruption.
It has been reported that Dunstone and TalkTalk’s biggest shareholders, including the private credit company Ares Management, could inject more money to take control of the consumer business if a deal cannot be reached. Shareholders have provided £350m in emergency funding over the past two years.
Background and decline
Dunstone established TalkTalk in 2003 as a subsidiary of Carphone Warehouse to shake up the UK broadband market. The business was later demerged and floated on the London Stock Exchange in 2010.
At its peak in 2015, TalkTalk’s market value hit almost £4.8bn. But the company struggled at the budget end of the market, unable to invest at scale to compete with rivals such as Sky and BT. As customer numbers dwindled, Dunstone engineered a £1.1bn deal with Toscafund Asset Management in 2021 to take the company private, saddling the business with debt.
He has been seeking a buyer for TalkTalk for years, with Virgin Media O2 and BT reportedly considering deals, but rivals and investors have been wary of the company’s embattled position. Dunstone remains chair of TalkTalk, but the business is effectively under control of its lenders, led by Ares.
