VodafoneThree bids for TalkTalk consumer business
Acquisition would help UK’s largest mobile operator fulfil ambition to double its broadband business
VodafoneThree has tabled a bid for the consumer operations of struggling rival TalkTalk, as the UK’s largest mobile operator looks to accelerate its expansion into home broadband.
The FTSE 100 group’s UK arm has made a late entry into the long-running auction of TalkTalk’s consumer division, which has 1.75mn customers, after initially declining to participate in the process, according to four people familiar with the matter.
VodafoneThree — formed by the £16.5bn merger between Vodafone UK and Three last year — was one of several companies to submit second-round bids for TalkTalk last week, the people added. New Street Research estimates TalkTalk’s consumer business could be worth between £200mn and £300mn.
The telecoms group, led by chief executive Margherita Della Valle, is seeking to double its UK broadband customer base to more than 4mn by the early 2030s. The company has about 29mn mobile customers.
Vodafone agreed a deal to take full control of the merged company last month, years earlier than expected.
TalkTalk, founded by Sir Charles Dunstone, has struggled since it was bought by London-based hedge fund Toscafund in 2021. The £1.1bn leveraged buyout added £527mn of debt to its balance sheet and left it exposed to rises in interest rates.
TalkTalk’s retail customer base has shrunk from more than 2.5mn in 2023 to 1.75mn as of May.
VodafoneThree said it was “very happy with our organic strategy” on fixed broadband, where it was “the fastest growing in the market”.
“Of course, we always keep a close eye on movements in the market and the sector,” it added.
Alongside efforts to sell its consumer business, TalkTalk is also seeking a buyer for its wholesale division, PXC. The FT reported in March that bidders for PXC included Octopus Investments, a division of Octopus Group, and a private equity-backed management buyout led by executive chair Tom O’Hagan.
TalkTalk’s largest shareholder, Ares, has made several cash injections into the company in recent years to help it cover costs and pay its bills, as it struggled with cash flow problems.
The FT reported last year that Openreach had threatened to block TalkTalk from putting new customers on its broadband network in a dispute over late payments.
TalkTalk declined to comment.