BT weighs improved TalkTalk offer after initial approach rejected
Telecoms group seeks deal within days for debt-laden broadband provider
BT is weighing an improved offer for UK broadband provider TalkTalk after an initial approach was rejected, as the telecoms group steps up its efforts to buy its heavily indebted rival.
The FTSE 100 group is expected to return with a higher offer on Sunday, according to two people familiar with the matter. A third person said BT had been seeking to agree a deal as soon as Monday but that this timeline could now slip.
The move comes after the company opened talks with the Department of Culture, Media and Sport over how to address competition concerns, the FT reported on Thursday.
Discussions are continuing, with neither a price nor a solution to the competition issues yet agreed, according to the two people familiar with the situation.
A tie-up between the companies would normally trigger a competition review because BT’s broadband network Openreach is TalkTalk’s largest supplier. BT is also the country’s largest broadband provider with a market share of roughly 30 per cent, according to estimates from Enders Analysis.
TalkTalk was previously in exclusive talks to sell its wholesale division to Octopus Investments and its 1.6mn-customer consumer wing to Opus Broadband.
However, neither party has been able to reach an agreement, forcing TalkTalk to explore options including a break-up that could split the company between its largest creditor Ares and private capital group Epiris. These talks have also stalled amid concerns about the level of fees payable to BT’s Openreach, its largest supplier, by any new owner of TalkTalk.
Ares, which is also a TalkTalk shareholder, has written to media watchdog Ofcom and ministers warning that the negotiation over payments to Openreach — which is legally separate from BT despite being wholly owned by it — could hinder rival bids, potentially to BT’s advantage, according to a person familiar with the matter.
TalkTalk has struggled since it was taken private in 2021 by London-based hedge fund Toscafund in a £1.1bn leveraged buyout that added £527mn of debt to its balance sheet. Shareholders including founder Sir Charles Dunstone and Ares have repeatedly had to inject capital into the company to ease cash flow pressures.
This included £235mn as part of a refinancing in December 2024 and a further £120mn in July last year. Ares injected another £115mn in March.
The company’s retail customer base has fallen from more than 2.5mn in 2023 to about 1.6mn in May.
Ares, BT and TalkTalk declined to comment.