BT has struck a deal to buy its troubled rival TalkTalk (TalkTalk Telecommunications Limited) and sister company PXC (PlatformX Communications Limited) in a move it says will provide “much needed and immediate reassurance” for staff and customers.
TalkTalk has 1.5 million retail customers and 1 million wholesale customers across the UK, including many operating in the health, emergency services, defence, education, transport, banking and government sectors.
Once part of Carphone Warehouse, TalkTalk has seen its fortunes swindle in recent years as customer numbers fell from around 4 million to in 2019 to about 1.5 million today.
During this time it has rebranded multiple times, brought in new leadership and overhauled its product line-up but none of this seemed to halt the decline.
Various bidders had been known to be interested in buying one or both of the businesses but none had been able to agree terms.
BT says its offer to buy the distressed companies out of administration was made “in the public interest, to protect customers and critical national infrastructure.”
TalkTalk will remain operationally independent until Culture Secretary Lisa Nandy decides if the takeover can proceed following a review carried out by the UK’s competition regulator.
Assuming the £400m deal is given formal approval, it will eventually be integrated into the BT Group where it “will become value accretive as the business is stabilised and synergies are realised.”
Clive Selley, the widely respected former head of Openreach and current CEO of BT International, will lead the stabilisation and integration planning of the acquisition. He’ll be replaced at BT International by Martijn Blanken who is also CEO-Designate of BT’s proposed international joint venture with Verizon.
Allison Kirkby, Chief Executive of BT Group, said: “This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed.
“BT is the digital backbone of the country, with a presence in every postcode. We have been connecting the nation for generations, stepping up in the moments that matter, and BT acquiring TalkTalk is now the only viable option to keep millions of customers connected and supported.
“Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk.
“Once the regulatory process has been concluded, TalkTalk’s customers will benefit from access to the UK’s best network, and the full range of market-leading products and services that BT offers.
“And, over a period of time, the transaction will create value for all our stakeholders – customers, colleagues, the country, and our owners.”
Nandy said: “These are unprecedented circumstances that require action now. That is why I am acting with urgency to ensure that impacts on public health, critical national infrastructure and supply to vulnerable customers are fully considered as part of this process.
“Phone and broadband services are vital national infrastructure. If TalkTalk services fail, there is a genuine risk to life and public services – including to hospitals, schools and emergency care.”