Nocturnal 
Whitehall officials are reportedly in daily contact with telecoms regulator Ofcom and senior civil servants amid fears that broadband provider TalkTalk could be forced into administration within days.
The concern, first reported by The Telegraph, is that Britain’s fourth-biggest broadband provider serves both millions of ordinary households and secure services for large organisations, including networks that the Ministry of Defence is said to partly rely on. Security officials responsible for critical national infrastructure are said to be racing to make sure TalkTalk can keep operating even if the company goes bust.
According to This Is Money, the government has been in direct contact with TalkTalk over its future, though it’s understood the MoD has contingency plans in place so it isn’t dependent on a single provider. TalkTalk has around 1.5 million customers in total, including more than 250,000 described as vulnerable households, among them elderly people who use personal alarms.
Why is TalkTalk in trouble?
TalkTalk has been battling heavy debts for some time, and is reportedly in significant arrears with Openreach, BT’s network arm, according to the Daily Mail. The company is trying to sell off two parts of its business as going concerns: its consumer arm, and its wholesale network business, PXC.
Talks to sell PXC to Octopus Investments for around £300million are said to have stalled, though Sky News has reported that London-listed Gamma Communications is also in the running with a £200million offer. Meanwhile rival firm Opus Broadband, which was eyeing the consumer business, has reportedly halved its offer to just £100million.
In a statement to investors, TalkTalk said: “TalkTalk group is in advanced discussions regarding potential disposals of its PXC and TalkTalk consumer businesses. The company is now in the final stages of its sale process for the business and expects to conclude both transactions imminently.”
A source close to the company played down suggestions that its services might stop running, insisting that wouldn’t happen. It’s understood a deal could be announced as early as next week.
What happens if the sale falls through?
If the sales collapse, TalkTalk – which employs around 900 staff – could become the biggest insolvency in the UK telecoms sector for decades. One option reportedly being discussed is handing control of TalkTalk to BT in the event of an insolvency, which would mark the end of the road for a brand that began life under Sir Charles Dunstone’s Carphone Warehouse empire.
Unlike the water industry, telecoms has no special administration regime that would let ministers use public money to guarantee services carry on. That’s reportedly left officials trying to work out whether keeping TalkTalk online during an administration could land the taxpayer with a hefty bill, and how the business could be handed to a new owner without disruption.
Shareholders, including Sir Charles and lender Ares Management, have already ploughed £350million into TalkTalk over the past two years to keep it afloat, and could be asked to stump up again. Sir Charles founded TalkTalk in 2003 as a Carphone Warehouse subsidiary before it floated on the London Stock Exchange in 2010, and led a debt-fuelled buyout of the firm in 2020 alongside private equity and credit funds.
For now, TalkTalk insists a sale is close. But with exclusivity periods with bidders having already expired and offers being slashed, the coming days look set to determine whether Britain’s fourth-largest broadband provider survives in its current form.
