BT is looking to acquire TalkTalk and its 3.2 million customers, according to a Daily Telegraph report, with BT in the early stages of exploring a takeover.
TalkTalk’s founder Sir Charles Dunstone and other shareholders have invested £235 million into the company to stave off the threat of insolvency, but the company has around £1.2 billion of debt.
TalkTalk also lost 400,000 customers last year and ranked bottom of Ofcom’s customer service rankings last month with a satisfaction score of 77 per cent. One of its listed bonds is now trading at 44p after trading at 78p in the pound in late April.
BT’s Openreach network division, which hosts the vast majority of TalkTalk’s customers, lost almost 250,000 broadband customers in the first three months of the year, in part as a result of TalkTalk’s decline.
If the takeover went through, the combined company would hold a market share of around 36 per cent, expanding its Plusnet brand, which competes with TalkTalk.
Virgin Media O2 has also previously weighed up an approach for TalkTalk as it looks to build up its own wholesale broadband business.
James Ratzer, an analyst at New Street Research, said BT was now a “more likely acquirer” of TalkTalk than its competitors, given the slowdown at Openreach and the potential benefits of a tie-up.
He added, “It would be an understatement to say that TalkTalk faces a difficult and uncertain future ... This is clearly an extremely high risk investment, but we now believe BT could enter the fray in some potential form increasing the chance of a potential deal.”
TalkTalk, which has been seeking a solution to its financial problems since splitting itself into three divisions in 2023, has been focusing on cost-cutting and asset sales to shore up its balance sheet.
The Salford-based company cut 350 jobs last year as part of a wider plan to strip £120 million out of the business. BT and TalkTalk both declined to comment.