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ISP TalkTalk Sells UK Business Division to its Own Shareholders UPDATE

Tuesday, Oct 3rd, 2023 (8:14 am) - Score 6,448
TalkTalk-Logo-in-Office-Next-to-Balloons

Broadband ISP TalkTalk has revealed that, following its recent demerger news (here), the group has finally sold their business division (TT Business Direct) to its own shareholders for £95 million – after seemingly being unable to turn earlier interest from Sky and Daisy Group into a tangible deal.

As previously reported, the long-established internet and phone provider – home to 4 million UK 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). As part of that, the provider has already begun to demerge the group into three separate businesses (TalkTalk Consumer, TalkTalk Business Direct and the Wholesale Platform).

NOTE: Back in 2020 TalkTalk became the subject of a £1.1bn takeover by Toscafund (here), which including debt valued the business at around £1.8bn.

The first piece to go is their business-to-business (B2B) arm – TalkTalk Business Direct, which serves the connectivity needs of approximately 90,000 small businesses. Discussions about this have been going on for a while, and it was previously suggested that, if no buyer could be secured, then the provider might have to rely on its own shareholders, which seems to be exactly what has happened.

According to The Telegraph (paywall), TalkTalk has sold ‘Business Direct’ to its own shareholders for £95m (less than the estimates of up to £150m they reportedly hoped to attract), although this deal does also include a wholesale agreement with another TalkTalk division – worth £25m over the next 3 years (the rumoured £150m figure also included the value of the wholesale services agreement).

Tristia Harrison, TalkTalk Group chief executive, said:

“The transaction delivers both investment for growth for Business Direct, as well as a long-term revenue agreement for our wholesale platform. This is good news for customers and colleagues alike, and is an important first step in our demerger plans.”

The outcome will make it that much harder for the operator to tackle the challenge of refinancing against the backdrop of their existing debt mountain. Put another way, they’ll surely be hoping for a considerably better outcome from the ongoing efforts to carve off their consumer and wholesale divisions, with hopes being pinned on raising cash through selling stakes in those businesses, or even disposing of them altogether.

Meanwhile, the operator’s shareholders will probably continue the hunt for a third party to gobble ‘Business Direct’, and any proceeds in excess of the agreed £95m would then be passed back to the company. At the same time, TalkTalk is trying to cut its costs wherever it can to help stabilise their balance sheet. For example, spend on sales and marketing has dropped by 40% and some redundancies are being made, primarily from central corporate functions.

The recent developments certainly make for a stark contrast with the TalkTalk of only a few years ago, which was willing to take a gamble by spending big on Pay TV in order to compete with rivals at BT, Sky (Sky Broadband) and Virgin Media. But today they’re more focused on returning to their core products of broadband and phone, while residential customers decline. One recent report suggested TalkTalk had shed around 100,000 customers over a 3-month period earlier this year, with more expected to follow.

UPDATE 10:27am

We’ve added a comment from TT’s CEO above and the special purpose vehicle that has been setup for this, which is controlled by the main shareholders, is called TFP Telecoms Limited (TFP).

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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
14 Responses
  1. Avatar photo Ad47uk says:

    sales and marketing has dropped.
    Really? I had a leaflet from them a couple of days ago, only even had a leaflet from Talk Talk one other time and that was in the days of ADSL. I suppose it is because they finally noticed that we have Openreach FTTP here, only took them over 9 months to realise.

    would not use Talk Talk even if they were the only option.

    1. Mark-Jackson Mark Jackson says:

      Dropped by 40%, not 100%.

    2. Avatar photo Matt says:

      +1 Mark^

      Also just because money spent has dropped, doesn’t mean you won’t see an increase in marketing.

      Price to pay someone to leaflet drop: £
      Price to pay for prime time TV adverts: £££££

      Those in marketing will be looking to get the most out of their budget (and their role) – if redundancies are on the cards then all back office staff will be looking to justify themselves.

    3. Avatar photo Ad47uk says:

      Never said it dropped by 100%, but just pointing out that I have not had anything from Talk Talk for years and now all of a sudden they sent me a leaflet. It was sent via Royal Mail, not by someone dropping it off. Had the name of my street printed on the front and in the inside, saying my street and giving the name of the street now have access to upgraded broadband.
      Took them long enough to find out that we had FTTP, Vodafone knew a couple of weeks or so after.

      since we had Openreach FTTP, I have never known so many broadband providers sending me leaflets.
      BT, vodafone, EE, Talk Talk.

    4. Avatar photo I love Starlink says:

      I am one of their Call Centre Floor managers who moved over from Warrington as I have said before. It’s all buzz in the sales Department despite the drop. One of my friends who has 29% stake is now one of my Bosses, which is fun 🙂

    5. Avatar photo Ad48uk says:

      @Ad47uk, I can tell you that TalkTalk doesn’t want to have you as a customer.

      Yours sincerely,

      The improved Ad48uk

  2. Avatar photo Jordan says:

    what does this mean really, can people still order from Talktalk Business?

    1. Avatar photo Matt says:

      Nothing really, I would expect it to be business as normal, they’ll end up carving TT into chunks and then selling it off when someone tables an offer they will approve of. (Albeit quality may drop slightly / more / is it even noticeable with TalkTalk??)

      Companies with large debt piles are all struggling, because of the high interest rate. It’s not just consumers who are getting hit by the BoE pushing up interest.

      We’ve had really low interest for a long time, people have got complacent – or at least didn’t expect it to go from 0.1% in Dec’21 to 5.25% less than 2 years later. That’s a huge change in <2 financial years – the bigger companies will take time to sort out their debt pile and sadly cost cutting is usually easiest to try and meet the extra financial demand.

  3. Avatar photo A says:

    Would it be unwise to sign up to talk talk business as i was planning thanks in advance for the advice

    1. Avatar photo Andrew G says:

      Why would you want to sign up with an ISP that has a dreadful reputation for service, plans to cut costs even further, is losing money, and whose future is uncertain?

    2. Avatar photo Ken says:

      @AndrewG
      The OP was referring to TalkTalk Business which is a very good ISP. Or can’t you tell the difference between residential and business?

  4. Avatar photo Paul says:

    I worked for TalkTalk until a few years back, left when they closed the London office. Some great people work there, but it’s not without it problems like any business. For me the strategy would change very often, when I was there they created Direct and that was after they tried to sell that bit of the business to Daisy as I recall.

    For consumer, once the product is in it’s good! But dealing with provisioning and support is a mess, even reaching out to old colleagues for help didn’t do much help as they work for the business arm. Nearly a year later and still reeling from the botched go live, I’ve left for youfibre. I could never forgive them, I tried to remain loyal to a point.

    1. Avatar photo Ex talktalk HGS says:

      I worked in their Preston office when they got rid of on shore tech support and offered them the option to relocate to India rather than offering them redundancy. The loyalty team were outsourced and working for them just wasn’t the same as working for Talktalk direct. I worry about the job security of anyone still at Talktalk in the UK to be honest.

  5. Avatar photo Sam Smith says:

    sky and daisy were interested in b2b division, though?

Comments are closed

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