The UK Government has announced it has intervened in BT Group's acquisition of TalkTalk amid concerns about a "genuine risk to life and public services" if the telecommunications company's connectivity is disrupted.
The Department for Digital, Culture, Media and Sport (DCMS) said on Monday, October 5, that it has "taken urgent action under Enterprise Act powers to intervene in the deal amid concerns that any collapse of TalkTalk could result in sudden disruption to vital phone and broadband services, putting lives, public services and vulnerable customers at risk".
Background to the deal
TalkTalk has been on the lookout for a buyer for its consumer and wholesale businesses after struggling under the weight of its debts in recent years, whilst also facing various headwinds, including a steep decline in its customer base.
The Government said after an extensive open commercial bidding process, "a number of potential buyers have been unable to reach an agreement on the sale for the whole of the business".
BT Group then stepped up, announcing on Monday that it had reached a deal to acquire those parts of TalkTalk's business out of administration in a pre-pack deal, in an agreement that would protect around 900 jobs.
Government intervention
BT said the deal, which is costing it around £400 million in total, will "protect continuity of service for its 2.5 million customers, avoiding the risk of material harm to vulnerable customers and key emergency services".
TalkTalk's customers include vulnerable households, and connections that support critical national infrastructure providers across health, emergency services, defence, education, transport, banking and government.
However, the DCMS says it has been monitoring the situation because many customers relied on TalkTalk's services, including vulnerable people. The department said DCMS Secretary of State Lisa Nandy's priority is to "guard against the risks to life and the continuity of the supply of telecommunications that may arise if TalkTalk's connectivity is disrupted".
Public Interest Intervention Notice
"Its networks support critical infrastructure and services that people and public bodies rely on every day – including calls to emergency services, ambulance and hospital communications and medical alarms. A sudden disruption would also impact businesses across the country that depend on reliable telecoms networks."
It added that given "these exceptional circumstances and the potential risk to life and public services, the Secretary of State is therefore today issuing a Public Interest Intervention Notice under section 42 of the Enterprise Act 2002".
Given BT's already dominant status in the sector, the Competition and Markets Authority (CMA) will assess any competition concerns and report back to Ms Nandy by October 19. She will then consider the wider public interest.
The Government says TalkTalk's customers don't need to take any action, and services should continue as normal while the acquisition process progresses. They'll be contacted directly about any changes they need to be aware of.
DCMS Secretary of State Lisa Nandy said: "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."
BT Group has been contacted for comment.
