News
The rescue comes as TalkTalk Group heads into administration
Today, BT has announced the purchase of TalkTalk’s consumer and wholesale divisions on a debt-free basis.
The deal will see BT will absorb TalkTalk’s roughly 1.5 million retails customers and 1 million wholesale customers. Service for these customers will continue uninterrupted and will likely only change once BT begins migrating them to its own systems.
Clive Selley, the current CEO of BT International and previously the CEO of Openreach until March this year, is set to ‘lead the stabilisation and integration planning of the acquisition’, according to the company press release.
Martijn Blanken will take Selley’s place as CEO of BT International.
TalkTalk had been formally seeking buyers for its consumer unit and its wholesale unit (PXC) since the start of the year, having struggled financially for years. In recent months, excusive talks were being held with both Opus Broadband and Octopus Investments for the consumer business and PXC, respectively, but no deals materialised.
The company was due to enter administration today.
“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,” said Allison Kirkby, Chief Executive of BT Group.
“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.”
BT’s late interest in buying the units was reported by the Financial Times last week, with BT reportedly checking for potential anti-trust pitfalls. Further reports suggested that BT’s initial approach had been rejected, leading to a higher offer being made on Sunday.
While financial details of the agreement were not revealed, BT said it estimates a roughly £400 million hit to its finances for the 2027 financial year as a result of the deal.
Naturally, a deal of this magnitude has already drawn attention from regulators, who will be concerned that the deal further entrenches BT’s dominant position in the market.
Following the deal’s announcement, the Secretary of State for the Department for Digital, Culture, Media and Sport (DCMS) has issued a Public Interest Intervention Notice (PIIN), obligating the Competition and Markets Authority (CMA) to investigate the deal.
For DCMS, the primary concern is the continuity of vital connectivity services and the “genuine risk to life and public services – including to hospitals, schools and emergency care”.
In a responding statement, BT said it welcomed the PIIN announcement, saying it would “work constructively with the Government and the CMA during their review”. Indeed, the company has pointed to ensuring continuity of service as a key driver of the deal, arguing that the acquisition was in the public interest.
The CMA is expected to report its findings on October 19.
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