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Debt Pressures Pushing Budget UK ISP TalkTalk Toward Breakup

Sunday, Jul 30th, 2023 (7:17 am) - Score 12,344

A new report highlights how a £330m revolving credit facility that matures next November, £685m worth of debt maturing in February 2025, higher borrowing costs and last year’s failure to agree a £3bn takeover by Virgin Media (here) has left broadband ISP TalkTalk with few options, and a break-up of the business is now expected.

The provider, which is home to around 4 million broadband customers in the UK, has been fairly busy over the past few years. Back in 2020 they became the subject of a £1.1bn takeover by Toscafund (here), which including debt valued the broadband provider at around £1.8bn.

Since then they’ve backed alternative network builder Freedom Fibre (here), acquired Ethernet provider Virtual1 (here), gobbled up Ovo Energy‘s (SSE) broadband base of 135,000 customers (here) and taken a controlling stake in Telecom Acquisitions Ltd (here), which manages a multitude of ISP brands and products (e.g. Home Telecom, Fleur Telecom, Hive Telecom and Eclipse Broadband).

On the flip side, fears of competition concerns from regulators may have helped to scupper a £3bn merger deal with Virgin Media (VMO2) last year (here), while a new MSN report (via The Telegraph) states that the ISP shed around 100,000 customers in the last three months alone. Some analysts are now even predicting that the competitive environment could see 10% of their base walk away this year alone, and consumer complaints are on the rise (here).

A few months ago we reported that TalkTalk was now considering its options for the future (here) and one of the first pieces to go is expected to be their business-to-business arm (TT Business Direct Limited) – here, which is home to around 80,000 customers and could be worth up to £200m. The Daisy Group is now said to have a serious interest in that, while their wholesale division is likely to follow.

According to the MSN/Telegraph piece, TalkTalk’s bosses recently held a private call with bondholders and announced a pullback in commercial activity, with plans to cut its sales and marketing costs, while at the same time shifting attention toward disposals (break-up) in order to generate cash (i.e. much like a second hand car, individual parts are sometimes worth more than the whole).

In a statement, Sir Charles Dunstone, TalkTalk’s original founder, claimed shareholders were “very excited” about the internet provider being broken up and sold off in pieces. Excited might be pushing it a bit, but they’re definitely low on options.

Sir Charles Dunstone said:

“Since we took TalkTalk private in 2021, we have been investing in growing our Wholesale division both organically and through the acquisition of Virtual1. This is now one of the largest and fastest growing B2B telecoms platforms in the UK. In addition, in Consumer, we have been working hard to upgrade customers to full fibre products underpinned by alternative fibre supply.”

The success or failure of this approach will partly depend upon the provider’s ability to extract a good value for what they have in those forthcoming sales. On the one hand, they might be able to extract a reasonable value for their business-to-business arm, but analysts warn that achieving the same with their wholesale division could be harder. The latter is partly dependent upon the sustainability of TalkTalk’s retail franchise, which is already under pressure.

Finally, even if we assume that all of this goes off without any problems, then that will leave the remaining retail ISP to sit alone in an aggressively competitive market. Some creativity may be required to return the provider to a more favourable position of growth.

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and .
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50 Responses
  1. Avatar photo Big Dave says:

    Is it coincidence that companies that do badly in customer satisfaction surveys also seem to be the ones most financially stressed? Maybe not….

    1. Avatar photo Andrew G says:

      There’s a bit of a link, but it isn’t especially strong, and it’s also unclear whether that’s down correlation or causation.

      Causation means that poor customer service directly results in worse financial performance. Correlation means that poor customer service is merely part of a broader picture of a badly run company, so poor strategy, poor execution, poor service, poor data security, poor management etc etc.

      There’s other reasons to think it’s correlation not causation: Lots of survey based research says that many (even most) customers will pay more for better service. I’ve seen numbers in the range 40-90% of customers willing to pay more for better service. But in commodity markets that simply isn’t the reality when customers have to fork out cold hard cash – personal experience in energy is that the number actually willing to pay more for better service is around 1-2%. And even they are still likely to be market engaged ABC1 active switchers.

      Nobody joins Talktalk expecting good service, they join because it’s cheap. Unfortunately, in a bitterly competitive market, there’s people offering similar prices and or better speeds, and Talktalk have already cut costs so far that they can’t even manage the basic “hygiene” level of customer service. Virgin Media are not much different on customer service, but they have a far stronger brand, better packages, and a clear (if declining) speed advantage.

      Since TT can’t cut costs any further, and raising prices will accelerate customer losses, perhaps this is the end of Talktalk. They won’t be missed. I wonder if it would have been different if somebody other than Dido had been CEO for seven years? Probably.

    2. Avatar photo Big Dave says:

      @Andrew G

      You’re right. Everyone says they would they would pay for better service, that is until they have to stump up the cash. Likewise everyone says they want to save the planet until it hits them in the pocket, then their enthusiasm wanes…..

    3. Avatar photo John says:

      The problem with the “saving the planet” is that it is not the ones in the spotlight are not the ones actually doing something like collecting plastic from rivers, instead we get the ones saying we are in a global boiling even though it’s insanely cold for a summer therefore you should pay more tax to the state and give up on going on holiday

      Hopefully people will apply the same logic to the govt. People would have more power and freedom if the state wasn’t stealing as much money from them

    4. Avatar photo Anonymous says:

      As I’ve said numerous times throughout these comments, the issues with TalkTalk go back a lot further than you think. They’re systemic, in fact they’re endemic; they were present in TT’s parent organisation, CPW. They were inherent inside the organisation from the beginning

      As far as the causation/correlation effect goes? Regarding TT?, It’s both and it’s not Dido’s fault; realistically you can’t blame her. But she did perpetuate the myths that were already present and she was instrumental in those endemic problems becoming systemic throughout a growing organisation. (just take a close look (not just headlines) at Free Broadband, from 2006, and you’ll see what I mean).

      Breakup of TT was inevitable, I’m just surprised it’s taken this long

  2. Avatar photo Bob says:

    If Talk Talk cannot make it work it does not look good for most of the Alt Nets

    1. Mark-Jackson Mark Jackson says:

      The AltNets are the ones helping to steal many of their customers away, and TalkTalk itself isn’t exactly known for the highest quality of customer service, so there are other factors.

    2. Avatar photo Ad47uk says:

      As Mark said, it is no doubt the rise of the Alt networks that are taking customer away from other providers, it has to make a difference.
      I remember years ago when Talk Talk had their free broadband forever and could not cope with the amount of consumers and that is where the bad name of Talk Talk started, sadly while things have improved, they still have far too many problems, mainly their customer service. They would be better to get a load of school children to do the job, they will do it better.
      never going from their script, even when you tell them that all the things they are going to tell us to do we have already done. BT is not much better, but at least they did listen when I phoned then once about a friends’ internet connection not working and realised that I had done all the tests, that is when you can understand them.

      Plusnet customer service was much better and one of the reason and price that I stayed with them for so long.

    3. Avatar photo Anonymous says:

      TT are holding the AltNets back. Their removal from the industry will create a growth mentality within the broadband marketplace; the AltNets will jump on the carcass, if TT isn’t bought out as a going concern

  3. Avatar photo Bob says:

    In another bit of news the Head of £5bn rural broadband upgrade exits as rollout falters

    The boss of the Government’s £5bn rural broadband upgrade is to exit amid fears the project is failing to deliver.

    He will be replaced by Dean Creamer, a government official who oversaw the 2022 Commonwealth Games in Birmingham.

    1. Avatar photo anonymous says:

      “Dean Creamer” ? I think I’d change my name by deed poll.

  4. Avatar photo Rob says:

    With higher interest rates, debt pressures are becoming a problem for many companies, especially the Altnets who are currently in the investment/building phase, they have huge debts and aren’t making any money yet.

    1. Avatar photo Anonymous says:

      That’s why TT imploding will be a good thing for the industry, those customers have got to go somewhere

  5. Avatar photo John Smith says:

    Sounds like yet another Zombie company that was could only exist, expand and keep operations going because debt for the past 10 years has been abnormally cheap. You can thank the central banks printing money around the planet – it worked, until it no longer did.

    This won’t be the first nor the last company to fold as a result of the risk free rate returning to something more historically normal (i.e. Money/debt shouldn’t be free).

    1. Avatar photo Big Dave says:

      Absolutely, Unfortunately the same thing extends well beyond the broadband industry and I think the next few years are going to be pretty rough.

    2. Avatar photo Flame Henry says:

      A competetive market should have room for budget, low-quality providers as well as premium top-quality.
      If you are smugly celebrating the demise of many of the UKs budget and challenger operators (including Three and CityFibre), you may want to think again.
      Just because you don’t personally buy from these companies, you still benefit from their cheap pricing by lowering the market price point. When these companies disappear, you’re left with a US owned cable company and an incumbent who wants to get back to sitting around sipping their tea all day and not doing things like building FTTH.

  6. Avatar photo Captain sensible says:

    I agree with some of the comments above. People say they will pay more for better customer service but most don’t. Nobody joins talk talk for anything other than cost.
    When your only option was slow broadband over openreach lines you might as well go for the cheapest option. There is no doubt that when an altnet builds full-fibre they will get some talk talk customers who can now get better speeds if they pay not just better customer service.
    But there is always room for cheap providers because if you don’t have them broadband will get very expensive quickly.
    So although I wouldn’t use talk talk I thank goodness there are those who do otherwise I’m sure I would be paying more.

    1. Avatar photo Anthony says:

      “Nobody joins talk talk for anything other than cost.”…I joined TalkTalk because for the first whole two years of my CityFibre line TalkTalk were the only provider I could order it from. TalkTalk had the exclusive rights for Newcastle upon Tyne.

    2. Avatar photo Anonymous says:

      Personally, having been around for over twenty years in this industry, I’d rather pay the extra and know it’s getting fixed when it breaks. Never been able to say that about TalkTalk

    3. Avatar photo Ad47uk says:

      and yet some providers can provide good customer service at a good price, Plusnet is one of them or was, I did hear the customer service is not as good as it used to be.

      as been said, people will not use Talk Talk for customer service, they used them because they were cheap, but over the last 2-3 years they have not even been that, their fibre 35 is £26 a month, which is more or less the same as most openreach based FTTC services. Talk Talk still seems to think we don’t have FTTP around here, they must be losing customers because of that.

      It would have to be amazing customer service for me to pay more, but in theory if the service is reliable then you should have to talk to them very often.

      I think in the 9 years I was with plusnet I chatted to them 3 times about problems and two of them were about the same problem, then once when for some reason the sim car did not activate in my phone

  7. Avatar photo Made Redundant says:

    The OVO staff and the Origin staff in the UK have been all let go actually. They are currently training their own replacements in South Africa.

    1. Avatar photo Anonymous says:

      Why am I not surprised by this? They did the same thing when they bought One-Tel in 2005

  8. Avatar photo ohno! says:

    So Daisy might buy the TT Wholesale side? or their wholesale side will go to TT? I am confused and worried now! i don’t want to lose my wholesale access!

    1. Avatar photo NE555 says:

      No, Talktalk Business (B2B) and Talktalk Wholesale are different things, and according to the article, Daisy are interested in the former.

  9. Avatar photo Anthony says:

    Their customer service really is so utterly bad. They have about 50 different departments. Nobody knows what they are doing so they just keep passing you between departments all the time. I hate more than anything speaking to them. And that damned CityFibre have made me need to speak to them to do anything and yet nobody knows what they are doing. I hate with a passion TalkTalks customer service.

    1. Avatar photo Badem says:

      to be fair would be the same regardless of which intermediary was supplying your service.

      Openereach would also tell you to report issues to your ISP, their contract is with the ISP not with you directly.

      Hvaing worked at TT for a large number of years its frustrating to see the decline as a number of the CS issues were flagged many years ago yet they insisted that outsourcing CS to CGI and other companies would not hurt the customer. It clearly has and since they TUPEd the UK staff to those ‘suppliers’ they cannot even get them back.

      The upper levels of management seemed to operate revolving doors, knowing the internal pay increase was capped you would often see managers leave for other companies to only reappear 2-3 years later on a much higher salary and still inept at the job. Instead, the people on the floor were routinely ignored.

    2. Avatar photo Anonymous says:

      It’s not the fact that they didn’t know what they were doing, they did. They just weren’t listening, which is worse

  10. Avatar photo Anonymous says:


    I wondered when this would happen. I’m calling this Karma, but then I’ve got good reason to (I was there at the beginning)… Things never changed and they kept making the same mistakes over and over; never learning from them – I’ve watched them for twenty years. And they’ve grown wayyy too quickly for it to be long-term sustainable and they’ve left a lot of destruction in their wake. But that’s called not listening to the right advice. He who shines brightest, burns out quickest…

    Anyhow, when it’s all about the money and the money dries up; where do you go from there?

    Breakup was inevitable.

    1. Avatar photo Alex A says:

      You’re right on the never learning.

      TalkTalk have done many acquisitions and it’s the same story each time, get a load of customers then loose a lot of them when they discover the shocking customer support.

      It’s a shame as TalkTalk’s network is actually good but really let down by the support and the company’s backend systems.

      When they first launched FTTP it was initially supported by the business team, which was a little bit of hope that they may have finally realised that paying crap support staff doesnt make sense if they take 3x as long to fix it. Then the hope was lost when they moved FTTP back to normal support.

    2. Avatar photo Badem says:

      @Alex and the worst thing was the people who developed the processes for their FTTP support were all transferred to FibreNation and then to either Cityfibre or Freedom Fibre.

      Safe to say the CS support and skills were massively lost at TalkTalk and instead they rely on poorly skilled offshore workers to troubleshoot issues which is invariable wrong. Had the same issue at BT and openreach with ISPs submitting poorly diagnosed faults to their suppliers only for the issue to be pointed back to the ISP as something they could have solved on the call with their customers or by sending them to correct kit.

      Prime example of this nowadays is ISPs passing cases to suppliers to move the fibre equipment in the property because little Kevin can’t get broadband in the summer house in the garden… should be ISP or Customer sending kit out (extenders etc) but instead an engineer rocks up checks and says ONT move is chargeable to the customer as its not service affecting, a small snippet the ISPs tend to forget to tell their own customers…

    3. Avatar photo Alex A says:

      @Badem I wasn’t aware of that, thanks for the information. Its a shame that they’ve had the perfect opportunity to improve their support with FTTP (and still make money going by the FibreNation pricing) and have defaulted back to the crap offshore support with little training.

    4. Avatar photo Anonymous says:

      @Alex A, @Badem,

      You don’t know how right you are; but those issues started a lot earlier in the timeline than you realise. TalkTalk’s primary methodology has ALWAYS been to put profit maximisation above everything else; even when they were a CPS Only Landline company in 2003. Customer support was always, and still is, at the bottom of the list. Trust me when I tell you that this leopard has never changed its spots and if they are breaking it up; then it’s about time – But it should have been done by Dixons in 2008.

      It’s always been about the money

  11. Avatar photo Christopher says:

    Not good news for Cityfibre, they’re already struggling with very low take-up numbers, if TalkTalk go under it’s only going to make things worse.

    1. Avatar photo Flame Henry says:

      Hooray. TalkTalk and CityFibre are finally going bust. The sooner the better I say.

      I’ve been trying to pay more for my broadband for a long time and these two inparticular have been making it very difficult. Looking forward to Virgin Media buying these guys up and getting back to predictable quarterly price increases.

    2. Avatar photo John says:

      Does anyone have an approximate share of the sales on the cityfibre network? I imagine TT would make up the largest chunk but could be interesting to see some breakdowns

      Wouldn’t CF just pass the customers to some other ISP just like they’ve done with Zybre?

    3. Avatar photo Alex A says:

      @John 88% come through Vodafone or TalkTalk. We don’t have a breakdown for them individually.

    4. Avatar photo Ed says:


      “Wouldn’t CF just pass the customers to some other ISP just like they’ve done with Zybre?”

      Don’t remind me, what an absolute shambles that was, complete nightmare!

    5. Avatar photo Greg L says:

      Obviously not good news for TalkTalk but for poor old Cityfibre things just seem to go from bad to worse.

  12. Avatar photo Martin says:

    I’ve been a TT customer for 9 years and can’t fault the actual broadband service they provide, yet since they stopped providing either cheap BB or fixed contracts, there’s not much of a USP left and are almost identical to some of the other ISPs.

    The final straw for me is that because I’m on a means tested benefit, TT aren’t offering a social tariff, so I’ll be off to BT (or EE if the BB is rebranded by then) in January.

    1. Avatar photo Anonymous says:

      Check Sky out, I’ll say no more than that

    2. Avatar photo Beveverley says:

      I was with shell energy broadband which now been sold to Octopus Just found out on 14/12 that octopus selling broadband side of shell energy customer to Talk Talk the deal going to be finalised in few days heard by sky news . I’m on means tested benefit decided to go back to BT for time being on there social tariff but look at sky they where next company was going to go to just did not want to go to talk talk with customer service not based in UK and if data breach.

  13. Avatar photo Jon PENNYCOOK says:

    TalkTalk own part of what was Pipex – Daisy own what was left after the sale I think. It would be interesting to see them come back together.

  14. Avatar photo K. Calder says:

    I’ve been with several providers,I’m now with Zen which I have to say is the best I’ve ever experienced. Before Zen I had talk talk and they were atrocious, outages every other week and when reporting a fault they always blamed my equipment when I knew it wasn’t which led to me changing to Zen. Since that change my connection hasn’t dropped once in over 3 years, they are more expensive at £60 per month but as I was told when young, you buy cheap, you get cheap.

    1. Avatar photo Ken says:

      Yet I was having speed issues on Zen (Cityfibre based FTTP) all to do with their backhaul migration which has been well documented on TBB. These issues magically disappeared when I moved to TalkTalk, again on Cityfibre. The icing on the cake is i’m saving £10/m over Zen but touch wood, haven’t required TT support yet (hopefully never)

    2. Avatar photo Big Dave says:

      @K. Calder

      Out of interest is your Zen provisioned on Openreach or City Fibre? I’m guessing you’re probably via Openreach.

  15. Avatar photo Buggerlugz says:

    One thing is for certain, if TalkTalk go tits up the board members will leave well compensated with a pat on their backs for delivering a crap service whilst the rest of the workforce will get totally and utterly shafted.

    1. Avatar photo Claire says:

      @Buggerlugz Yes, same as the Altnets that will inevitably go under.

      The generally older, highly paid, upper management will disappear into the sunset to retire with healthy pensions.

      Meanwhile the lower ranking workforce, many with young families and mortgages, will be thrown onto the redundancy pile.

  16. Avatar photo Bob says:

    Talk Talk strategy seemed to be to gain market share by offering a low price and by taking iver other companies, To do so though meant keeing costs down but even with that the price was to low to make a profit, We will see the same with many of the altnets. They will never mke a profit at the price they are charging

    1. Avatar photo Anonymous says:

      You’re half right there. However, with TalkTalk gone, the AltNets are no longer living in a Vertical Marketplace. We might just see one or two of them shine

  17. Avatar photo Jim says:

    Interest rates going up again today. Bad news for the network builders with huge debts.

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