Latest news with #SirCharlesDunstone
Telegraph
29-06-2025
- Business
- Telegraph
TalkTalk on the brink as dreams of budget broadband billions unravels
As the modestly named American pianist John Legend took to the stage at Old Billingsgate Market in the City of London last week, one onlooker attracted almost as much attention. Sir Charles Dunstone was a special guest at an annual corporate jamboree hosted by Liberty Global, co-owner of the broadband and mobile giant Virgin Media O2. Normally, the presence of the chairman of a partner and rival would be nothing unusual at such an event. But Sir Charles's own broadband business TalkTalk is on its knees and the main topic of telecoms industry gossip. It narrowly avoided collapse last year, and has now sparked turmoil across the sector after falling behind on payments to suppliers. While Sir Charles indulged in some easy balladry, TalkTalk's future hung in the balance. Its predicament has sparked alarm in Whitehall over fears that more than three million customers could be left in the lurch if it collapses. As the company struggles under an exodus of customers and crippling debt costs, Sir Charles is attempting one last throw of the dice: an ambitious scheme to break up the business and sell it off for parts. It raises the prospect of an ignominious ending for Sir Charles, the founder and executive chairman whose shareholding risks being wiped out in any future deal. With TalkTalk on the precipice, can bosses carve a path to survival for the broadband supplier? TalkTalk's troubles have been a long time in the making. Sir Charles spun TalkTalk out of his mobile phone retailer Carphone Warehouse in 2010 and grew it into a major broadband provider targeting the budget end of the market. But a series of acquisitions, coupled with a highly leveraged £1.1bn take-private deal in 2021, loaded the company up with debt. As competition in the broadband market has grown more fierce and margins have narrowed, this balance sheet strain has taken its toll. TalkTalk was saved from insolvency in an 11th-hour rescue deal last year, with Sir Charles and other shareholders including major investor Toscafund pumping in £235m to keep it afloat. Yet the bailout has done little more than kick the can down the road. TalkTalk, which has around 3.2m customers, is still grappling with eye-watering repayments on its debts of £1.2bn. Making matters worse, revenues are in reverse as the company haemorrhages customers amid deep job and spending cuts. The cash woes are such that TalkTalk has fallen behind on payments to suppliers including BT's Openreach in recent months. In response, BT has reportedly threatened to block TalkTalk from putting new customers on its network. TalkTalk argues that it has a fully-funded business plan and that its cost-cutting strategy has begun to pay off. But with the prospects of a turnaround looking slim, the company is now poised for a full break-up. Bosses are hiring advisers to oversee a sale of the group's consumer and wholesale divisions. TalkTalk has already sold its business-to-business unit back to its shareholders in a £95m deal. However, observers point out that the break-up could put off potential suitors as they would be hamstrung by complex agreements between the consumer and wholesale arms. James Ratzer, an analyst at New Street Research, says: 'I think any buyer would be most interested in the whole company to give them flexibility to restructure it as they like.' Should a sale not materialise, TalkTalk's bondholders – largely consisting of asset managers – could end up taking control of the company. Either way, these outcomes would be likely to cement an embarrassing misstep for Sir Charles, who founded his telecoms empire from the boot of a car. The tycoon has previously rebuffed attractive takeover offers, including a £3bn approach from Virgin Media O2 (VMO2) three years ago. Now with TalkTalk's equity value thought to be zero, he risks being left empty-handed. 'We struggle to see any scenario in which the sponsors will be able to get any equity capital returned to them,' said Ratzer. 'Surely last year they should have refused to put in new capital and handed the business over to the creditors at that stage, rather than injecting further money?' That ship has sailed, however, and shareholders must now decide whether to pump yet more money into TalkTalk, or bail out now. Bondholders, who would be likely to take a haircut as part of any deal, have been pushing shareholders to stump up more money. A source familiar with the matter said the company was in 'advanced' talks to raise an additional £100m through a combination of existing investors and asset sales. Some of TalkTalk's bonds have slumped to trade as low as 44p in recent weeks, indicating a lack of confidence that the company will be able to repay its debts. While this has now risen to 58p, it remains well below the price of around 80p in April. Ares Management, which owns a stake in TalkTalk and provided it with a £440m high-interest loan, is now thought to be in the driving seat given its dual role as shareholder and debtholder. It took additional security over the company in last year's refinancing. A source close to Ares said it was still 'very supportive' of the company. Beyond the corporate intrigue is a political headache for the Government. With financial troubles mounting, government officials have expressed concerns about the possibility of TalkTalk collapsing, according to multiple industry sources. This would be of particular concern given TalkTalk is thought to have a significant number of vulnerable customers, including elderly people and those on lower incomes. Regulator Ofcom has for several years been drawing up contingency plans in case of a supplier collapse, but these have largely been focused on the scores of 'alt-net' firms that have cropped up to challenge the dominance of BT. 'The expectation has always been that it would be an alt-net that would fail, not an established internet service provider', says Matthew Howett, at Assembly Research. Karen Egan, at Enders Analysis, says: 'It will be worrying [the Government] because they do have a high proportion of vulnerable customers. 'I think there's a fear of a lot of disruption, but in the case of TalkTalk there's a lot of ways they can ensure the service doesn't ever go down.' Potential options include a 'supplier of last resort' scenario, similar to the one used in the energy sector. This would see a trusted larger player, such as BT, appointed to take over TalkTalk's customer base should it collapse. Alternatively, the Government could intervene to prop up the company for a limited period, giving customers time to switch to a different provider of their choosing. Most people in the industry believe a full-blown insolvency is unlikely. 'I think everyone knows that there are safety nets in the market,' says one source. But as TalkTalk's troubles deepen, larger rivals are starting to circle. Executives at BT have held early-stage discussions about a potential takeover amid concerns that the former monopoly's Openreach division is taking a hit from TalkTalk's customer losses. VMO2 is also understood to be interested in a potential swoop after its previous approach failed. Mike Fries, the chief executive of VMO2's co-owner Liberty Global, is said to be close to Sir Charles. However, any takeover bid by BT or VMO2 would trigger serious competition concerns and face protracted regulatory scrutiny. Sky, which has previously weighed up a bid for TalkTalk, is not thought to be interested. As a result, Vodafone has emerged as a viable contender. The telecoms giant is in the throes of integrating mobile network Three following a £15bn merger and chief executive Max Taylor has insisted the company has 'no plans for inorganic activity' in its fixed business. Nevertheless, VodafoneThree has earmarked broadband as a major opportunity for growth, so TalkTalk's sizeable customer base could prove an attractive proposition. Any rescue deal would ensure continued service for customers and avoid a messy collapse, albeit while leaving Sir Charles high and dry. But with TalkTalk's survival far from guaranteed, officials will be keeping a close eye on how the crisis unfolds. 'The policy interventions in fixed broadband have been good up until now,' says Howett. 'It would be a shame to see the TalkTalk saga blemish that reputation.' A spokesman for the Department for Science, Innovation and Technology said: 'It would not be appropriate to comment on speculation, or commercial matters relating to specific companies. 'The UK broadband market continues to be a highly competitive market with plenty of choice for consumers. Our priority is ensuring customers, particularly those with vulnerabilities, are protected as the market evolves.'
Yahoo
20-06-2025
- Business
- Yahoo
TalkTalk plots break-up of telecoms and broadband group
TalkTalk, the telecoms and broadband group founded by Sir Charles Dunstone, is preparing to hire City advisers to oversee a break-up of the company. Sky News has learnt that investment banks were asked to pitch this week for a mandate to oversee a potential sale of TalkTalk's two remaining businesses: its consumer arm and PXC, its wholesale and network division. City sources said on Friday that Barclays and Morgan Stanley were among the banks in the frame to oversee the strategic review, which has been triggered by separate unsolicited approaches for both parts of the group. Money latest: TalkTalk, which has been grappling with a strained balance sheet for some time, is also in talks to raise a further £100m from a combination of existing investors and asset sales, according to people close to the situation. The company has recently drafted in advisers from Alvarez & Marsal, the professional services firm, to assist its finance function with liquidity management, the people added. TalkTalk has more than 3m broadband customers, with parts of its customer base expected to be sold as part of its efforts to raise money. It completed a £1.2bn refinancing late last year, but has been under pressure from bondholders to raise additional capital. Read more from Sky News:Sir Alan Bates backs Post Office Capture victims'Inflation and customer cutbacks' blamed for dive in retail salesGovt considers industrial energy cost aid The likely proceeds from the sales of its two divisions were unclear on Friday. Earlier this month, the Financial Times reported that BT's broadband infrastructure arm, Openreach, could block TalkTalk from adding new customers to its network in an escalating dispute over payments owed to BT Group. A TalkTalk spokesman declined to comment.
The Guardian
11-06-2025
- Business
- The Guardian
BT considers takeover move for struggling rival TalkTalk
BT is weighing up a potential takeover of the rival telecoms and broadband company TalkTalk, which is struggling amid financial difficulties and a customer exodus. The UK's biggest broadband provider is understood to have discussed the strategic possibility of buying TalkTalk. However, it is understood no approach or talks have been held with TalkTalk, and bankers have not been asked to draw up takeover plans. TalkTalk, founded by Sir Charles Dunstone, is the UK's fourth-largest telecoms group, with about 3.2 million customers. However, the group lost 400,000 customers in the 12 months to February, and last year Dunstone and other shareholders were forced to inject £235m to shore up its finances. TalkTalk has struggled since it was taken private by Toscafund, a London-based hedge fund, in a £1.1bn leveraged buyout that added £527mn of debt to its balance sheet in 2021. It now has about £1.2bn in debt on its balance sheet. A BT-TalkTalk tie-up would give the combined group control of about 36% of the UK broadband market. 'Companies are always looking at rivals in their sector, particularly distressed assets,' said one City source discussing the potential takeover plans, which were first reported by the Telegraph. In recent weeks it has emerged that TalkTalk has fallen behind on payments with supplies and partners including Openreach and CityFibre. According to estimates from New Street Research, TalkTalk pays its broadband suppliers more than £60m each month. The Salford-based company cut 350 jobs last year as part of a wider plan to strip £120m out of the business. If a takeover offer from BT were to crystallise, it could face objections from rivals and an investigation from the UK competition regulator. Virgin Media O2 has also previously considered making an approach for TalkTalk. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion BT and TalkTalk declined to comment.
Daily Mail
10-06-2025
- Business
- Daily Mail
BT eyes rescue bid for troubled rival TalkTalk after low satisfaction ratings spark a customer exodus
BT is thought to be among a host of major telecoms firms considering takeover bids for troubled rival Talk Talk as its finances come under pressure. Salford-based Talk Talk, which is run by entrepreneur Sir Charles Dunstone, was rescued from collapse by its shareholders last year when they pumped in £235million to keep the business afloat. But the broadband provider has been struggling once again as low satisfaction ratings have prompted an exodus of disgruntled customers. Talk Talk lost 400,000 users last year and sits at the bottom of satisfaction rankings compiled by the industry regulator Ofcom. The company's mounting difficulties have left it prey to larger rivals in the UK's fiercely competitive broadband market. Takeover talk: BT is thought to be considering a bid for troubled rival Talk Talk which lost 400,000 users last year and sits at the bottom of satisfaction rankings 'Every telecoms company in Britain will be looking at Talk Talk right now,' an industry source said. BT may be interested in bailing out Talk Talk as most of the company's broadband customers use the telecoms giant's Openreach network. But Talk Talk's decline had coincided with a drop in the number using Openreach, depriving BT of rental payments which it charges for using the network. It also threatens to boost rival broadband providers that are hoovering up Talk Talk's unhappy users. Firms such as CityFibre and Gigaclear have poured billions into building their networks of internet cables across the UK in a bid to compete against the dominance of Openreach. As a result of Talk Talk's difficulties in keeping its customers, Openreach has reportedly threatened that it will block the firm from putting new customers on its network. Discussions about a possible bid are thought to be underway at BT but a formal approach has yet to be made, according to the Telegraph. BT declined to comment. Rival Virgin Media O2 also previously considered a bid for Talk Talk to boost its own broadband business. Any takeover is likely to attract intense scrutiny from the competition watchdog as it would tighten their grip over the broadband market. But any potential bidder will be aiming to secure the support of Ofcom, which is thought to be monitoring Talk Talk closely due to fears its collapse would leave millions in limbo over their broadband services.
Telegraph
10-06-2025
- Business
- Telegraph
BT plots TalkTalk takeover as cash crisis escalates
BT is plotting a rescue of TalkTalk as an escalating cash crisis threatens disruption in the broadband market. The former state monopoly is in the early stages of exploring a takeover of TalkTalk and its 3.2m customers, according to City sources. BT is considering a bid for Britain's fourth-largest broadband provider amid fears that its own business could be damaged by the tightening squeeze on TalkTalk's finances. TalkTalk, which is led by Sir Charles Dunstone, its founder, narrowly avoided collapse last year. Sir Charles and other shareholders were forced to pump £235m into the company to stave off the threat of insolvency. That deal provided some breathing space but TalkTalk remained saddled with £1.2bn of costly debt. The further deterioration of its business, as customers defect to rival broadband providers, has put it back under pressure within months. TalkTalk lost 400,000 customers last year. It ranked bottom of Ofcom's latest customer service rankings last month with a satisfaction score of 77pc. One of its listed bonds is now trading at 44p, suggesting uncertainty in the market over whether the company will be able to repay its debts. It was trading at 78p in the pound in late April. Customer exodus TalkTalk's challenges have begun to take a toll on BT's Openreach network division, which hosts the vast majority of TalkTalk's customers. Many of the customers switching away are opting for new challenger networks which have invested in their own fibre-optic networks rather than rented capacity from Openreach. Openreach lost almost a quarter of a million broadband customers in the first three months of the year, in part as a result of TalkTalk's decline. TalkTalk has also fallen behind on payments in recent months and Openreach has reportedly threatened to block the company from putting new customers on its network. Insiders stressed that internal discussions at BT were at an early stage and that a takeover bid had not yet been discussed with TalkTalk. The combined company would hold a market share of roughly 36pc, strengthening its hand against the fibre-optic challenger and expanding its Plusnet brand, which competes with TalkTalk at the value end of the market. However it would be likely to attract protests from rivals and scrutiny from competition regulators given BT already holds a dominant position in the broadband market. CityFibre, the largest of the fibre-optic challengers, hosts around 150,000 TalkTalk customers on its network. A lengthy investigation by the Competition and Markets Authority would raise the risk of further customer losses at TalkTalk that would dilute the appeal of a merger, City sources cautioned. BT executives are said to be hopeful of receiving support from Ofcom, which would be closely involved in a competition investigation. The telecoms regulator has been monitoring TalkTalk closely amid concern that a collapse could leave millions of customers in the lurch. 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 £120m out of the business. Further job losses are expected in the year ahead. It has also pared back marketing budgets. But the moves risk fuelling subscriber losses further and discontent over poor customer service.
