With a potential takeover by Virgin Media O2 (VMO2) now off the table, TalkTalk’s options are limited
According to a report from The Telegraph, UK ISP TalkTalk is preparing to break-up and sell off the company’s various business units, largely to meet the demands of looming debt deadlines.
The company has been facing financial hardship for some time now, with its total debt standing at over £1.1 billion. To make matters worse, the deadlines to service these debts are rapidly approaching, with TalkTalk carrying a £330 million revolving credit facility that matures next November, as well as £685 million of debt that matures in February 2025.
With interest rates soaring, refinancing these debts could be eye-wateringly expensive, leading the company to consider its options.
For a time, it looked like the solution to these problems would be solved by a proposed £3 billion takeover by VMO2 last year, but the deal ultimately failed to materialise.
As a result, the company has been forced to look inwardly for solutions, with the first hints of a strategic shakeup being revealed in March this year, when the company’s management team began to undergo changes.
M&A specialist James Smith, formerly Head of Finance at Capricorn Energy, was brought in as TalkTalk’s as its new chief financial officer, while consumer and B2B chief Jonathan Kini was replaced by with Adam Dunlop, TalkTalk’s MD of Supply and Partnerships.
Around the same time, reports suggested that the company was looking to offload is B2B division. Today, this sale process is already underway, with analysts suggesting that the unit could be worth £150–200 million. B2B telco group Daisy Group is among those reportedly bidding for the division.
Indeed, it now appears that TalkTalk is leaning even more heavily into splitting off its various business units, with reports suggesting that TalkTalk executives communicated to bondholders that they were scaling back commercial activity, including sales and marketing budgets by 40%, in an effort to shore up the company’s bank balance.
They also explained that the company would now be focussing on disposals, noting that “individual parts [of the business] are worth more than the whole”.
The company is now working to legally separate its consumer business, aiming to attract buyers or investors.
If all of these divestments do come to pass, that will leave TalkTalk as a purely wholesale business.
How would the breakup of TalkTalk impact the UK telecoms market? Join the operators in discussion at this year’s live Connected Britain conference