BT seeks government nod for potential TalkTalk takeover
Telecoms group holds talks with UK officials over possible antitrust issues involved in buying smaller competitor
BT has opened talks with UK government officials over the possibility of a takeover bid for struggling rival TalkTalk, as the country’s largest broadband provider prepares a late entrance into the auction for the heavily indebted company.
Allison Kirkby, chief executive of the FTSE 100 telecoms group, this week met officials at the Department for Digital, Culture, Media and Sport to seek assurances that a takeover of TalkTalk would not trigger an in-depth antitrust review, according to three people familiar with the matter.
BT is interested in buying the company’s wholesale and retail businesses, two of the people said.
Its broadband network Openreach, which is deemed by industry watchdog Ofcom to have significant market power, is TalkTalk’s largest supplier. The division covers more than 30mn UK homes, almost 25mn of them with full fibre.
People familiar with the TalkTalk auction said that it had been held up partly by other bidders’ concerns over the quantum of fees payable to Openreach.
Meanwhile, BT is also the country’s largest broadband provider with 30 per cent market share, according to estimates from Enders Analysis.
BT is working with antitrust lawyers at Clifford Chance on the possible TalkTalk deal, some of the people said.
TalkTalk’s owners, which include founder Sir Charles Dunstone and private capital group Ares, have been seeking a buyer for the troubled business for months. The company was previously in exclusive negotiations to offload its wholesale business to Octopus Investments and its consumer operations, which serve 1.6mn customers, to Opus Broadband.
However, neither party has been able to reach an agreement, forcing TalkTalk to explore options including a break-up that would potentially carve up the company between private capital group Epiris and Ares, its largest creditor. Talks with several potential buyers are ongoing, according to one of the people.
The company’s existing shareholders have been forced to inject money into the business to cover shortfalls on several occasions.
BT is hoping to have gained enough clarity over the antitrust situation to be able to make a decision over a deal for TalkTalk by the weekend, one of the people said.
Karen Egan, head of telecoms at Enders Analysis, said that “when companies get to the level of distress that TalkTalk appears to be in, competition concerns tend to take a back seat.”
“In this instance, the government will be more concerned about security and continuity of service for vulnerable customers,” she added.
TalkTalk has struggled since it was taken private by Toscafund, a London-based hedge fund, in a £1.1bn leveraged buyout in 2021 that added £527mn of debt to its balance sheet. The company’s retail customer base has fallen from more than 2.5mn in 2023 to about 1.6mn in May.
Shareholders injected £235mn into TalkTalk as part of a refinancing in December 2024 and then a further £120mn in July last year. Ares pumped in another £115mn in March.
A DCMS spokesperson said that “this is a commercial matter and we do not comment on speculation”.
TalkTalk, BT, Ares and Epiris declined to comment. Clifford Chance did not immediately respond to a request for comment.