{"id":32758,"date":"2022-10-31T14:24:50","date_gmt":"2022-10-31T14:24:50","guid":{"rendered":"https:\/\/www.ispreview.co.uk\/?p=32758"},"modified":"2022-10-31T14:31:42","modified_gmt":"2022-10-31T14:31:42","slug":"virgin-media-o2-uk-puts-possible-3bn-talktalk-merger-on-ice","status":"publish","type":"post","link":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/10\/virgin-media-o2-uk-puts-possible-3bn-talktalk-merger-on-ice.html","title":{"rendered":"Virgin Media O2 UK Puts Possible \u00a33bn TalkTalk Merger on Ice"},"content":{"rendered":"

A major newspaper has reported that Virgin Media<\/a> (VMO2) has allegedly gone cold on the idea of reaching a \u00a33bn merger deal with budget UK ISP TalkTalk<\/a>, which would have added the provider’s broadband base of over 4.2 million to their own base of 5.6 million in order to more effectively compete with BT<\/a>.<\/p>\n

The deal became a hot topic in mid-July after multiple newspapers reported that talks were underway (here<\/a>), which could have created a broadband operator with a comparable customer base to BT<\/a>’s. Such a deal may have also helped to support VMO2\u2019s plans to expand their Fibre-to-the-Premises<\/strong> (FTTP<\/a>) network to a further 7 million UK premises by 2027 via a new joint venture (here<\/a>).<\/p>\n

However, the Sunday Telegraph<\/a> (paywall) claims that VMO2’s parents may have had a rethink due to market and regulatory uncertainties, which partly reflects the UK’s wider economic turmoil (i.e. debt markets are not as accessible as they were a few months ago) and questions over what position the Competition and Markets Authority<\/a> (CMA) might have taken. Not to mention the recent issues with TalkTalk<\/a>’s accounting practices (here<\/a>).<\/p>\n

On top of that there’s a question mark over whether or not TalkTalk is worth \u00a33bn. Back in 2020 they became the subject of a \u00a31.1bn<\/strong> takeover by Toscafund<\/strong> (here<\/a>), which including debt valued the broadband provider at around \u00a31.8bn<\/strong>. But since then they\u2019ve backed altnet builder Freedom Fibre<\/a><\/strong> (here<\/a>), acquired Ethernet provider Virtual1<\/strong><\/a> (here<\/a>) and gobbled up Ovo Energy<\/a>‘s (SSE) broadband base of 135,000 customers (here<\/a>).<\/p>\n

Despite this, the newspaper reports that VMO2 and TalkTalk are still allegedly engaged in “strategic discussions<\/em>“, which are thought to include the possibility of the ISP harnessing Virgin’s network as part of a wholesale agreement. VMO2 have long planned to wholesale out access to their existing network, and they’re also establishing an open access network via a new joint venture, which will extend their fibre to another 5-7 million premises.<\/p>\n

At the same time, TalkTalk are, much like other ISPs, also in talks with Openreach<\/a> about the possibility of introducing further price cuts to FTTP<\/a> under a new ‘Equinox 2<\/em>‘ discount scheme (here<\/a>). The Sunday Times appears to suggest that such a deal could raise questions over TalkTalk\u2019s existing relationship with its other major network partner, Cityfibre<\/a>. But so far the ISP has done a reasonable job of adopting both in a complementary fashion and Equinox 2 may not be aggressive enough to remove Cityfibre<\/a>\u2019s cost advantage (e.g. TalkTalk\u2019s 1Gbps package on Cityfibre is just \u00a336, but that goes up to \u00a349 on Openreach<\/a>).<\/p>\n

Mind you, had TalkTalk and VMO2 agreed to merge as previously proposed, then that could have had a much bigger impact on the provider’s wholesale relationships with Openreach, Cityfibre and Freedom Fibre<\/a>. But without a merger, TalkTalk may at some point need to raise more funding to keep their balance sheet in order.<\/p>\n","protected":false},"excerpt":{"rendered":"

A major newspaper has reported that Virgin Media (VMO2) has allegedly gone cold on the idea of reaching a \u00a33bn merger deal with budget UK ISP TalkTalk, which would have added the provider’s broadband base of over 4.2 million to their own base of 5.6 million in order to more effectively compete with BT.<\/p>\n","protected":false},"author":1,"featured_media":25605,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ngg_post_thumbnail":0,"footnotes":""},"categories":[1],"tags":[472,32,74,475],"class_list":["post-32758","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uk_isp_news","tag-business","tag-o2","tag-talktalk","tag-virgin-media"],"share_on_mastodon":{"url":"","error":""},"yoast_head":"\nVirgin Media O2 UK Puts Possible \u00a33bn TalkTalk Merger on Ice - ISPreview UK<\/title>\n<meta name=\"description\" content=\"A major newspaper has reported that Virgin Media (VMO2) has allegedly gone cold on the idea of reaching a \u00a33bn merger deal with budget UK ISP TalkTalk,\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ispreview.co.uk\/index.php\/2022\/10\/virgin-media-o2-uk-puts-possible-3bn-talktalk-merger-on-ice.html\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Virgin Media O2 UK Puts Possible \u00a33bn TalkTalk Merger on Ice - 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Just to recap. In 2020 TalkTalk became the subject of a \u00a31.1bn takeover by Toscafund - controlled by hedge fund tycoon Martin Hughes (here), which including debt valued the broadband provider at around \u00a31.8bn. The deal took the ISP private and gave them more financial flexibility for their future plans. Since then, they've backed Freedom Fibre (here) and this week made the notable acquisition of Ethernet provider Virtual1 (here). According to the FT (paywall) and Sky News, TalkTalk is now said to have asked investment bank Lazard to review its options after allegedly being approach by several groups, including Vodafone and Sky (Sky Broadband). Lazard is a logical choice as they recently acted as Financial Advisor to TalkTalk on the Virtual1 transaction. Some industry analysts have reportedly suggested that TalkTalk itself could now be worth \\\"at least\\\" \u00a33bn. But this seems rather optimistic for an ISP that doesn't have any significant fixed line broadband infrastructure to call its own (excluding their old unbundled LLU network) and largely just piggybacks off Openreach (BT), CityFibre and Freedom Fibre. But TalkTalk do have a strong business and wholesale side. Funnily enough, Sky Broadband are in a similar position with their own fixed line base, while Vodafone also likes to piggyback off Openreach and CityFibre. At present, Vodafone has a fixed broadband base of 991,000 customers, while Sky Broadband is estimated to be home to around 6.7 million and TalkTalk has approximately 4.2 million. Suffice to say, anybody gobbling up TalkTalk would instantly become a much larger provider, giving them a greater say in how the UK broadband market develops and more opportunities for convergence (Vodafone with mobile, and Sky with mobile and TV). Crucially, TalkTalk's consumer base is mostly made up of those on older copper and hybrid fibre lines (i.e. ADSL and FTTC \\\/ VDSL2), which are ripe for a future migration to FTTP. At the time of writing, all of the aforementioned operators have decline to comment on the reports, and TalkTalk has yet to receive any serious formal offers. In other words, we strongly suspect that this is largely just an exercise in spin to help TalkTalk drum up some more productive interest in the idea. But at the same time, it's not unreasonable to suspect that they might succeed, as the interest seems genuine. On the other hand, we see reports like this every year or so and only a very few ever convert into a serious offer. Time will tell. Much may depend upon whether or not TalkTalk\u2019s new owners are more flexible and pragmatic about doing a deal than the previous lot. 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Just to recap. In 2020 TalkTalk became the subject of a \u00a31.1bn takeover by Toscafund - controlled by hedge fund tycoon Martin Hughes (here), which including debt valued the broadband provider at around \u00a31.8bn. The deal took the ISP private and gave them more financial flexibility for their future plans. Since then, they've backed Freedom Fibre (here) and this week made the notable acquisition of Ethernet provider Virtual1 (here). According to the FT (paywall) and Sky News, TalkTalk is now said to have asked investment bank Lazard to review its options after allegedly being approach by several groups, including Vodafone and Sky (Sky Broadband). Lazard is a logical choice as they recently acted as Financial Advisor to TalkTalk on the Virtual1 transaction. Some industry analysts have reportedly suggested that TalkTalk itself could now be worth \"at least\" \u00a33bn. But this seems rather optimistic for an ISP that doesn't have any significant fixed line broadband infrastructure to call its own (excluding their old unbundled LLU network) and largely just piggybacks off Openreach (BT), CityFibre and Freedom Fibre. But TalkTalk do have a strong business and wholesale side. Funnily enough, Sky Broadband are in a similar position with their own fixed line base, while Vodafone also likes to piggyback off Openreach and CityFibre. At present, Vodafone has a fixed broadband base of 991,000 customers, while Sky Broadband is estimated to be home to around 6.7 million and TalkTalk has approximately 4.2 million. Suffice to say, anybody gobbling up TalkTalk would instantly become a much larger provider, giving them a greater say in how the UK broadband market develops and more opportunities for convergence (Vodafone with mobile, and Sky with mobile and TV). Crucially, TalkTalk's consumer base is mostly made up of those on older copper and hybrid fibre lines (i.e. ADSL and FTTC \/ VDSL2), which are ripe for a future migration to FTTP. At the time of writing, all of the aforementioned operators have decline to comment on the reports, and TalkTalk has yet to receive any serious formal offers. In other words, we strongly suspect that this is largely just an exercise in spin to help TalkTalk drum up some more productive interest in the idea. But at the same time, it's not unreasonable to suspect that they might succeed, as the interest seems genuine. On the other hand, we see reports like this every year or so and only a very few ever convert into a serious offer. Time will tell. Much may depend upon whether or not TalkTalk\u2019s new owners are more flexible and pragmatic about doing a deal than the previous lot. Arguably, TalkTalk might have gone much further by now had they taken some different decisions a few years ago (e.g. co-investing in FTTP instead of Pay TV)."},{"@type":"BreadcrumbList","@id":"https:\/\/www.ispreview.co.uk\/index.php\/2022\/10\/virgin-media-o2-uk-puts-possible-3bn-talktalk-merger-on-ice.html#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.ispreview.co.uk\/"},{"@type":"ListItem","position":2,"name":"Virgin Media O2 UK Puts Possible \u00a33bn TalkTalk Merger on Ice"}]},{"@type":"WebSite","@id":"https:\/\/www.ispreview.co.uk\/#website","url":"https:\/\/www.ispreview.co.uk\/","name":"ISPreview UK","description":"Top Broadband ISP and Mobile Provider Information Site","publisher":{"@id":"https:\/\/www.ispreview.co.uk\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.ispreview.co.uk\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"},{"@type":"Organization","@id":"https:\/\/www.ispreview.co.uk\/#organization","name":"ISPreview.co.uk","url":"https:\/\/www.ispreview.co.uk\/","logo":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/www.ispreview.co.uk\/#\/schema\/logo\/image\/","url":"https:\/\/www.ispreview.co.uk\/wp-content\/uploads\/2020\/07\/ispreview_uk_logo.jpg","contentUrl":"https:\/\/www.ispreview.co.uk\/wp-content\/uploads\/2020\/07\/ispreview_uk_logo.jpg","width":1000,"height":1000,"caption":"ISPreview.co.uk"},"image":{"@id":"https:\/\/www.ispreview.co.uk\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/ispreview","https:\/\/x.com\/ispreview","https:\/\/www.linkedin.com\/in\/mjack\/","https:\/\/bsky.app\/profile\/ispreview.bsky.social","https:\/\/mastodon.social\/@ispreview"]},{"@type":"Person","@id":"https:\/\/www.ispreview.co.uk\/#\/schema\/person\/de66a8b4e937c21c80e443d1bf9c35d5","name":"Mark Jackson","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/www.ispreview.co.uk\/wp-content\/uploads\/2023\/01\/nggallery_import\/Mark-Jackson-96x96.jpg","url":"https:\/\/www.ispreview.co.uk\/wp-content\/uploads\/2023\/01\/nggallery_import\/Mark-Jackson-96x96.jpg","contentUrl":"https:\/\/www.ispreview.co.uk\/wp-content\/uploads\/2023\/01\/nggallery_import\/Mark-Jackson-96x96.jpg","caption":"Mark Jackson"},"description":"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. 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