M&A rumours swirl around UK telco TalkTalk

Ray Le Maistre
By Ray Le Maistre

Feb 12, 2024

  • UK telco TalkTalk is splitting into three separate businesses
  • The business services division has already been sold
  • Now the significant wholesale network operation has reportedly attracted a bid for a minority stake
  • And the residential broadband business has once again been linked to takeover talks with Virgin Media O2

UK communications service provider TalkTalk, which is on the verge of splitting into three separate companies in order to facilitate M&A deals, has been linked to significant potential takeover bids for its two largest and most important divisions,  TalkTalk Consumer and B2B Wholesale Platform. 

Last year, TalkTalk Telecom Group, which has been struggling financially and feeling the weight of £1bn in debt, initiated a “demerger” process to split itself into three separate companies: TalkTalk Consumer, home to its residential broadband customer base of more than 2.4 million; B2B Wholesale Platform, which provides wholesale services to UK ISPs; and TalkTalk Business Direct, which provides services to about 90,000 small business users and has already been sold for £95m to a company controlled by TalkTalk Telecom Group’s investors.

The wholesale platform, which has hundreds of ISP, enterprise and public sector customers and is also known as PlatformX, has previously been linked to M&A talks with infrastructure investor DigitalBridge, which already has skin in the UK broadband network game through its investment in wholesale fibre access altnet Netomnia

Now, though, Sky News is reporting that Australian investment bank Macquarie is set to table a £450m bid to acquire a 40% stake in the wholesale unit, a price that would value the PlatformX business at around £1.13bn. 

There is also reported interest in the consumer division from giant UK operator Virgin Media O2, which in late October 2022 abandoned talks to buy the TalkTalk Telecom Group in its entirety

According to The Telegraph newspaper, VMO2 is in talks about the potential acquisition of TalkTalk Consumer, a move that would give it greater scale for its fixed broadband operation, which currently boasts about 5.7 million customers, though the speculation amounts only to early stage talks. 

We’ve been here before with such speculation, and there is currently no comment from either party (understandably), so this could again come to nothing. In fact, Sky News reports that a source close to TalkTalk has denied that any talks with VMO2 are underway. 

However, with TalkTalk Telecom Group in need of cash, now is the time for any interested parties, such as VMO2, to strike a good deal, though that’s a thought that will no doubt have also crossed the mind of VMO2’s rivals, such as Vodafone UK. 

- Ray Le Maistre, Editorial Director, TelecomTV

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