BT weighs higher TalkTalk bid in UK broadband deal push

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BT weighs higher TalkTalk bid

Highlights

BT plans to submit a higher offer for TalkTalk after its initial bid was rejected, with regulatory talks ongoing and no agreed price yet.
TalkTalk's prior sale negotiations with Octopus Investments and Opus Broadband for separate business units stalled over Openreach-related fee concerns, prompting alternative break-up considerations.
TalkTalk's retail customer base declined from over 2.5 million in 2023 to 1.6 million in May amid repeated capital injections totaling 470 million pounds since December 2024 to ease debt pressure.

Revised bid and regulatory talks

As first reported by the Financial Times, BT is expected to return with a higher offer on Sunday after its first approach for TalkTalk was turned down, according to people familiar with the matter.

A further person says BT had been aiming to reach an agreement as soon as Monday, although that timetable may now slip. The telecoms group has opened discussions with the Department of Culture, Media and Sport on how to address competition issues that would arise from a deal, and those talks are continuing without an agreed price or remedy.

A combination of the two companies would normally face competition scrutiny because Openreach, BT's broadband network business, is TalkTalk's largest supplier. BT is also the UK's largest broadband provider, with an estimated market share of about 30%, based on Enders Analysis figures.

Pressure on TalkTalk's sale options

TalkTalk had previously been in exclusive negotiations to sell its wholesale division to Octopus Investments and its 1.6 million-customer consumer unit to Opus Broadband. Neither process has produced an agreement, pushing the company to examine alternatives including a break-up that could divide the business between its biggest creditor, Ares, and private capital group Epiris.

Those discussions have also stalled amid concerns over the level of fees that any new owner of TalkTalk would have to pay to Openreach. According to a person familiar with the matter, Ares, which is also a TalkTalk shareholder, has written to media regulator Ofcom and ministers warning that negotiations over Openreach payments could hinder rival bids and potentially work to BT's advantage.

TalkTalk has been under pressure since it was taken private in 2021 by Toscafund in a 1.1 billion pound leveraged buyout that added 527 million pounds of debt to its balance sheet. Shareholders including founder Sir Charles Dunstone and Ares have repeatedly injected capital to ease cash flow strain, including 235 million pounds in a December 2024 refinancing, a further 120 million pounds in July last year, and another 115 million pounds from Ares in March. The company's retail customer base has fallen from more than 2.5 million in 2023 to about 1.6 million in May.

Ares, BT and TalkTalk decline to comment.

Our earlier report on tighter UK rules around gig work self-employment explained how ministers are considering measures that could expand employment rights and increase scrutiny of delivery platforms’ worker classification. It also noted that, despite stronger enforcement such as right-to-work checks, no legislation has yet been scheduled to overhaul worker status or tax rules—leaving businesses with continued incentives to keep people classed as self-employed.

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