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Job Losses as UK ISP TalkTalk to Demerge into Three Businesses UPDATE

Friday, Sep 22nd, 2023 (3:33 pm) - Score 21,040
TalkTalk-Logo-in-Office-Next-to-Balloons

Broadband ISP TalkTalk has this week informed staff of their plan to formally demerge the group into three separate businesses for consumers, businesses and wholesale. Under the plan, the full legal demerger aims to be completed by 1st March 2024, but some redundancies are expected.

As previously reported, the long-established internet and phone provider – home to 4 million broadband customers – is currently in the process of trying to deal with pressure from its existing debt pile, which will involve selling off parts of their business (here and here) – starting with their business-to-business (B2B) arm. But doing that requires some wider changes in the group, and that’s where this week’s developments may come into play.

NOTE: Global investment firm KKR recently agreed to provide TalkTalk with a £75m non-recourse financing facility to help keep things rolling (here).

According to ISPreview’s sources, yesterday saw TalkTalk announce to staff the formal demerger of their group into three separate businesses (TalkTalk Consumer, TalkTalk Business Direct and the Wholesale Platform), with separate operations expected to be effective from 1st November 2023 and the full legal demerger completed by 1st March 2024.

As part of this change, Tom O’Hagan is to be appointed the CEO of their Wholesale Platform business, which sounds as if it will be adopting a new brand name – PlatformX, although this should perhaps be considered a working title. At the same time, Adam Dunlop will become the new CEO of TalkTalk Consumer, which is currently in the process of returning to its original core focus of home broadband and phone services.

The provider also informed staff that TalkTalk Business Direct (home to 80,000 business customers) is, as previously reported, still in the process of being sold, and thus they don’t currently appear to be making any big changes to the existing management. This process is still expected to complete over the coming months.

Naturally, a change this big doesn’t happen without consequences, and the information we’ve seen suggests that 50 roles are at risk of redundancy, pending a formal 30-day consultation that started today. But the provider will continue to maintain their HQ in Salford (Soapworks) and their satellite offices, even though over time there will be more separation between the consumer and wholesale sides.

The announcement focuses a lot on highlighting how the changes will give each business greater autonomy and separation of management, which they hope may also help to attract new investment. But it may also make the process of separating and selling off some of their current divisions easier, although it remains to be seen how they approach that with their wholesale side (wholesale is closely linked to their consumer services).

We queried all of this with TalkTalk, but the provider declined to comment on the demerger.

UPDATE 27th Sept 2023

TalkTalk has today confirmed all of this with an official announcement, which doesn’t add anything new to what we already reported above.

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Mark-Jackson
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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Comments
36 Responses
  1. Avatar photo Ivor says:

    I also wonder what the point of splitting consumer and wholesale is – other than for the benefit of shareholders, accountants and lawyers rather than employees or customers.

    Especially at a time when even much of BT Wholesale’s network is dedicated to servicing BT’s brands, as many ISPs have moved to building their own networks (and others still are going all the way to the last mile). At least BT has a mobile network to beef up their offering. What’s “PlatformX” going to do to differentiate?

    1. Avatar photo XGS says:

      Easier to sell once separated.

    2. Avatar photo Apriana says:

      Wholesale is more focused on business services like Ethernet, backhaul and cloud. Consumer is large volume basic Internet. BT wholesale are fixed to use Openreach where as the Platform on Talk Talk is opening up lots of altnets

    3. Avatar photo Ben says:

      I’d assume that Wholesale / PlatformX will give access to the various AltNets which TalkTalk works with today (and might work with in the future), with Consumer acting as the anchor tenant. I imagine some potential wholesale customers will want to see a reasonable degree of separate between wholesale and consumer.

    4. Avatar photo Ivor says:

      I’m just not sure the altnet argument is that compelling – though I can see why it might be suggested, let “platformX” deal with the patchwork quilt of vendors and configurations instead of the ISPs themselves.

      TalkTalk Wholesale (as it was) got somewhere by being able to drastically undercut BT Wholesale, and since both firms used the same physical network, ISPs could move between one and the other without too much disruption to users.

      Even those ISPs that have built their own networks seem reluctant to stray too far away from Planet Openreach, and that seems logical when they have reasonable pricing (Ofcom finally acting in everyone’s interests this time) and coverage that dwarfs anyone else.

  2. Avatar photo Alex A says:

    Hi Mark, please can decapitalise Three in the title, makes it look like the operator Three has bought them.

    1. Avatar photo Jamie says:

      I also thought three bought them

    2. Avatar photo Ben says:

      +1 — while the title is clear once you read it carefully, from a skim it looks like there’s something going on between TalkTalk and Three UK

    3. Avatar photo Steven Brown says:

      Confused me too at first.

    4. Avatar photo Daniel says:

      Same here – I thought Three was taking over.

    5. Mark-Jackson Mark Jackson says:

      More evidence of how annoying it is when companies choose common or generic words for their name 🙂 . I saw a company yesterday that was just calling itself “THE” (I think it was short for something, possibly common sense) and nearly cried.

  3. Avatar photo Jonny says:

    Slightly positive news that the Virtual1 founder is leading wholesale, maybe it won’t be awful after all

  4. Avatar photo Jim says:

    Last throw of the dice was selling the full gamut to vmo2. Once this fell through and given the debt pile it was inevitable.

  5. Avatar photo Hostmaster says:

    The article is confusing as it makes out that Three is involved . All this was inevitable since they made me redundant back in 2012.

    1. Avatar photo Jim says:

      Yep at @hostmaster you were the catalyst. Been a long gestating 11 years since they let you go. A slow burner

    2. Avatar photo Techie Duty Manager says:

      2012. Were you one of the techies in Preston or Warrington? I was spared redundancy as I was in their Options aka Loyalty campaign. Don’t worry, we got screwed by Careline, which became HGS. Anyway, if you’re ever looking for work, come work with us at Zen! Loads of ex TT staff are here..

    3. Avatar photo NotJeff says:

      Don’t panic Techie Duty Manager, they’re still screwing us at HGS!
      It’s all good though, either yet another migration on the cards or some more redundancies on the horizon. My excitement for the future can be measured in very small units!

      Back to the topic at hand, there was murmurings of the redundancies at TTB’s SMC earlier this week, with the person one us spoke to already aware of their impending exit. This is giving off the usual Friday news dump vibes. Genuinely wish all those at risk, who’ve not already been told, the best of luck, there are some fantastic people who work there.

  6. Avatar photo Roger_Gooner says:

    As Talktalk is a big LLU operator, perhaps part of the wholesale plan is to rent capacity or bundles of broadband and telephony services on the LLU network to ISPs.

    1. Avatar photo Apriana says:

      That’s what it does now, wholesales it’s llu

    2. Avatar photo MikeP says:

      LLU has limited life now, since the “local loop” has limited life. And although it’s sort-of possible, the full LLU operators won’t want to keep their copper once the Openreach exchange closure programme gets rolling.
      Must make for an interesting 10-year business plan in TT wholesale.

  7. Avatar photo Buggerlugz says:

    Looks like talk talk is running out of steam. Probably making sure of the big cash grab for the board when it folds. At least those at the top will end up with a healthy pay off.

  8. Avatar photo Localzuk says:

    Not sure why there would be job losses for a demerger? When companies merge, one of the driving factors is efficiencies by eliminating duplicate jobs. So, splitting the company means they’ll need new people in those roles that were being shared won’t they?

    Or is this just the reality of capitalism? Any time a business change is made, they look at firing a bunch of people.

    1. Mark-Jackson Mark Jackson says:

      I suspect it has more to do with the expected sale of their B2B division, which is occurring at the same time.

    2. Avatar photo Andrew G says:

      The second one of those. You’ll have spotted that the number of CEO positions has increased.

      I suspect TT Consumer are doomed. If there’s the assets and the business, then the wholesale operation should survive and as XGS noted above is more saleable unencumbered by Consumer, and discussions are underway to sell TT Business – and they must be pretty advanced if they’re not announcing any changes to that business now.

      The problem with TT Consumer is that it’s hugely oriented towards low spend, price sensitive consumers, with really low ARPU (around half of Virgin Media, for example). Having cut costs and customer service quality to try and match their means, they can’t put prices up because customers will just move to another supplier’s new customer discount offer if TT try that, and the inherent TT offer doesn’t justify higher prices. Likewise, they struggle to attract new higher paying customers because of their reputation. TT’s business model has been a bit like towing a caravan down a narrow, winding road that becomes even narrower and twistier until forward progress is impossible, but it is now impossible to reverse the combination back along the route taken in.

      The private equity investors (Toscafund) who took TT private two and a half years years back believed they had a magic sauce for sorting this pickle out, and it seems they’ve tried and failed. That takeover was for a value of £1.1bn. It’ll be interesting to see what they get for the parts – and what the loss on disposal will be, net of operating losses, non-operating costs, restructuring, and unrecoverable asset values. Where this will leave TT’s residential customers I don’t know – despite the history somebody might be mad enough to think that 4m budget customers must be a big enough number to make money from, but now they’ll just wait until TT Consumer have no supporting group to bail them out, and offer a pittance. I don’t know if its legally feasible, but one option might be to sell off tranches of customers, according to ARPU, and then shut down the pile of unsaleable accounts that are left, handing them off to Ofcom’s SoLR process. Ofcom wouldn’t like that at all, but if it is legally possible then it could be a logical commercial solution.

    3. Avatar photo Bob says:

      There is a reasonable argument to keep wholesale and business together but they have chosen to separate it. It may well be the business unit is profitable and may be sold off freeing up cash to try to rebuild the wholesale and consumer side of the business

      With FTTH it will in my view consolidator down to a few big players. BT/Openreach being one. VM another

      Probably at most only room for about 4 big players in the market the rest of the alt nets being swallowed up

      If we take FTTC there are now very few ISP’s in the market comared to the early days

    4. Avatar photo XGS says:

      Not clear what point you’re making, Bob.

      What do the number of FTTC ISPs have to do with how many FTTP networks there are or are likely to be any more than it was to do with how many FTTC networks there are?

      I would guess they are separating wholesale and consumer partly because wholesale makes money. Another reason being consumer is essentially worthless besides the customer base, and that is only worth anything to a business building a full fibre network wanting an anchor tenant.

      Not so easy to be an anchor tenant if you’re using a variety of networks that may overlap with the owner and carrying agreements with them.

  9. Avatar photo Ex Telecom Engineer says:

    I’ve only read about this in this article, so I’m only guessing, but my guess is they’re splitting B2B and consumer as separate anchor tenants on their wholesale arm.
    They’ll probably apportion all the debt onto the consumer business, or a TalkTalk Group entity if it isn’t a complete separation, to make B2B more attractive to prospective buyers; And once B2B’s sold, they’ll still collect some revenue from the B2B buyer via the TalkTalk wholesale business. All the servers and any owned network will likely be ringfenced in the wholesale business, with consumer and B2B consisting mainly of sales staff, and customer service operators capable of doing simple line tests and dealing with customers.
    This looks very much like a wind down of the business, with the owners looking at extracting as much value as they can.

  10. Avatar photo Name says:

    “PlatformX” – Has Elon payed them a visit 😉

    1. Avatar photo binary says:

      PlatformX is surely a placeholder name, for this reason if not for any other!

  11. Avatar photo Hong Kong Phooey says:

    Who is Andrew G

    He’s got style, a groovy style,
    and a car that just won’t stop.
    When the going gets rough, he’s super tough,with a Hong Kong Phooey chop
    (Hi-Ya!)

    1. Avatar photo Andrew G says:

      Thank you!

      Lucky we’re both old enough to remember the magic that was HKP.

    2. Avatar photo XGS says:

      HKP was, and is, a legend.

  12. Avatar photo TheDoctorUK says:

    TalkTalk has to have been one if the worst ISP’s i was ever with, constantly cutting off, poor network infrastructure, and customer support is longed for, switched to BT and happy. Though as soon as FTTP is ready it be time to cut that copper!

  13. Avatar photo Mollie Smirgo says:

    What is it that Talktalk will wholesale? Don’t they use Openreach for last mile basically everywhere? Who would be interested in wholsaleing access to their core network? (Other than TalkTalk Consumer)

    1. Avatar photo JmJohnson says:

      TalkTalk wholesale to many providers.
      We used to have EFM via Daisy and that used TalkTalk.

  14. Avatar photo Lost Dreamer says:

    Quite the reverse takeover engineered by Mr. O’Hagan 🙂

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