Broadband Group TalkTalk Set to Appoint PJT Partners to Oversee UK Break-up
The debt strained TalkTalk Group, which has already been through a demerger of its businesses and last year secured a £400m refinancing package to avoid a default on its debts (here, here) – not to mention the latest £120m funding deal to help tackle recent financial pressures (here), is reportedly set to appoint advisers PJT Partners to help sell off its remaining operations.
The long-established UK internet and phone provider – home to 3.2 million broadband customers (down c.400k from last year) – has spent the past few years trying to find ways of dealing with the pressure from its existing debt pile. Over that time we’ve seen the group being demerged into three separate businesses (Talk Talk Consumer, Talk Talk Business Direct and PXC [Wholesale]), as well as various asset sales, job cuts, offshoring of support, cost-cutting / efficiency savings and all sorts of other measures to try and fix the foundations.
Suffice to say that the group is still not out of the woods. In fact, not a year seems to go by when we don’t hear word of their continuing efforts to hunt a buyer for different parts of their business (here), albeit so far without much success.
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The latest development, according to Sky News, is that TalkTalk appear to be in the process of appointing investment bank PJT Partners to conduct a Strategic Review of their operations, which will be aimed at securing a disposal (sale) of its remaining businesses. Regular readers might be forgiven for experiencing a strong sense of deja vu.
Selling off the group’s consumer broadband ISP (TalkTalk) and wholesale division (PXC) has so far proven to be more than a little difficult and is expected to take some time. TalkTalk’s Ethernet subsidiary (currently part of PXC) could potentially also be sold off on a standalone basis, according to insiders.
Finding a buyer for such a large retail provider would be difficult, not least since most of their base often comes linked to their own wholesale (PXC) platform / network and any alternative networks with an interest would need to figure out how to migrate those (PXC might not like that idea). Equally, even some of the biggest retail ISPs would need to scale-up rapidly in order to take on the extra support and service burdens that come with such a sizeable base.
At present, the likes of Vodafone and Sky Broadband are probably better bets than BT or Virgin Media for TalkTalk’s retail base, partly due to their packages and operations being more closely aligned with TalkTalk’s retail business. But Sky has just cut hundreds of jobs (here) and so may not be in the best position, while it’s unclear whether Vodafone would have the appetite while their teams are already busy integrating operations after their merger with Three UK.
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Finally, competition and other market regulators (e.g. Ofcom) are likely to take an interest in such a deal, which probably rules out BT (their existing retail scale would make this very difficult). Time will tell. TalkTalk is said to have declined Sky’s request for a comment.
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, BlueSky, Threads.net and Linkedin.
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Would the existing players want to take the customer base on as a going concern? Maybe better for them to let TalkTalk fail and buy the customer base at a fire sale price. Quite a few of their customers are provisioned with altnets which would be another reason why BT would not be in the running.
Who else would buy it? Sky or Vodafone are the only two providers with the financial clout and the existing relationships with both Openreach and Cityfibre.
If the company is being split up then it probably doesn’t matter anyway, as it won’t come with the existing TT/PXC infrastructure. So BT could buy the Openreach-based customers (who probably still make up the overwhelming majority) and someone else could have the rest.
That said, I would wonder if it’s worth it. TT by definition will have some of the most price-conscious customers and there are a lot of integration hassles for any buyer.
If (and it’s a big if) Ofcom allowed a sale to BT, I imagine selling of the altnet customers would be one of the conditions. I imagine BT would be primarily interested in shoring up the Openreach customer base more than anything.
Yawn. Love your deja view comment.
Somebody please pull the plug on this…
Déjà vu.
You would think another 3 million plus customers would interest some of the bigger players! The latest speculation is going to make present customers think about jumping ship when their contracts are up. The TalkTalk saga continues!
The Plusnet side of BT would be a good fit, getting that past Ofcom would be the problem, although they found no problem when it came to Vodafone/Three, surprisingly some might say.
It’s about to be merged into EE so they won’t want to do anything with it – they are killing Plusnet off – the final stages are in place
@Simon: I don’t think Plusnet will be merged with EE as it is the supposedly value brand side of BT, not sure where you get that idea from. Most commentators believe Plusnet will remain the value side of BT. If they were to buy the customer side of TalkTalk, then Plusnet would be a good fit, off course that may not happen, time will tell.
Any purchase by BT would probably come under its PlusNet label, so it’s not completely impossible.
What a mess.
A tough call. PJT Partners may well already have proposals in mind, but if they pull it off, they will have earned their fees.
If TalkTalk go PopPop BT would probably end up being the supplier of last resort anyway.
If I were a betting man, I’d be looking at Telefonica or CityFibre’s wallets.
That would require quite a strategic shift from CityFibre, which is a wholesale-only player and usually does all it can to avoid having to deal with the conflict that having its own retail base might bring. Mind you, they have just had a change of CEO, which can sometimes breed new strategies.
The question I ask is whether CityFibre could afford to see TalkTalk customers being moved onto another network.
“Is the buyer in the room with us now?”
The supposed definition of insanity is doing the same thing over and over and expecting different results. How long has TalkTalk and/or PXC been up for sale now? Pretty much everyone has taken a look at the possible purchase and decided against it. There is clearly something about the price and TalkTalk’s books that is off-putting.
In all seriousness, of course they can be sold, but it’s apparent that the owners, Dunstone, Ares Management, and Toscafund, are trying to set the price too high. The level of debt (or debt-to-EBITDA ratio to be really specific) within TalkTalk, combined with its strained reputation, is not exactly appealing.
The rumour was that Octopus would purchase TalkTalk. Why else would TalkTalk move to the Octopus operating model and write off approximately £32 million (page 58 of the TT annual report) of wasted investment or committed spend on their CRM platforms to move to Kraken (Octopus CRM platform)? Whether or not that Octopus deal is still on the table is anyone’s guess at this point.
I’m annoyed that they’re trying their hardest at the moment to lock me into another contract when my contract doesn’t end until next year. There’s no way I’ll be signing another contract if BT take them over, I’ll be going elsewhere! I hate BT with a passion and I’ve been reading that they’re trying to buy them.
Im sure BT wouldn’t want you as a customer anyway. They would rather people that don’t complain all the time
The investors are so happy they are writing emails to thank James Smith.
Some of their money might be rescued from the burn pit senior Directors have been throwing it in.
Strange they are all still there. Except if you were from V1.
Little bit of politics.