BT has acquired TalkTalk’s consumer and wholesale businesses after the struggling telecoms company entered administration, in a deal expected to have a total cash impact of around £400 million.
The telecoms giant has bought TalkTalk Telecommunications Limited and PlatformX Communications Limited (PXC) on a debt-free basis after a lengthy attempt to sell the businesses failed.
The move includes the cost of the deal, administration and transaction costs, working capital and an expected £60 million trading loss for the rest of the financial year.
It also includes £100 million that would otherwise have been paid to BT-owned Openreach.
According to BT, it stepped in because of concerns about what a collapse of TalkTalk could mean for customers and essential services across the UK.
TalkTalk currently has around 1.5 million retail customers and one million wholesale customers. It also has customers across health, emergency services, defence, education, transport, banking and government.
The company generated revenues of around £1.2 billion over the past 12 months but remained loss-making.
For now, customers should see little immediate change. BT and TalkTalk will continue to operate as separate businesses while regulators review the takeover, a process expected to take place over the coming weeks, the telecom giant revealed.
BT also confirmed that Clive Selley CBE will immediately take the lead on stabilising the business and planning how the acquisition will be integrated. Martijn Blanken will step into Clive’s role as CEO of BT International, while continuing as CEO-Designate of BT’s planned joint venture with Verizon.
BT CEO, Allison Kirkby, 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.”
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