Broadband giant BT has snapped up embattled telecommunications firm Talktalk in a move that prevents the collapse of infrastructure hosting some 2.5m customers.
The FTSE 100 group said on Monday it had acquired Talktalk and its wholesale arm PlatformX Communications (PXC) out of administration on a debt-free basis.
The deal, for an undisclosed sum, is estimated to take a £400m bite out of BT’s bottom line, from transaction fees, working capital, a £60m trading loss, and £100m in uncollected Openreach revenues.
It will provide “immediate reassurance” for Talktalk employees and its 1.5m retail customers and 1m wholesale users across the UK, BT said.
Talktalk, which is the UK’s fourth-largest broadband company, was founded in 2003 by Charles Dunstone as part of the Carphone Warehouse group. It has suffered under a highly competitive telecoms market and saw its customer numbers shrink from highs of 4m in 2019.
‘Genuinely unprecedented’
The group has debts reported to be around £1.4bn and has required repeated injections of additonal funding. This March, Talktalk announced £115m of new facilities from its existing shareholders and lenders, which was made up of £65m of term funding and a £50m working-capital facility.
In the last 12 months, TalkTalk made around £1.2bn in revenue and was loss-making. It is estimated to employ around 900 people.
Allison Kirkby, chief executive of BT, 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.”
Kirby added the “immediate priority” was to stabilise the business and provide a “safety net” for those who rely on Talktalk.
