TalkTalk weighs £3bn sale as rivals line up

TalkTalk was taken private 16-months ago and the potential deal values it at £3bn. Photo: Igor Golovniov/SOPA/LightRocket via Getty

The owners of TalkTalk have reportedly been approached for a potential sale of the company amid a frenzy of international telecoms industry consolidation.

TalkTalk, one of the UK's biggest internet providers, has received "tentative" offers by the likes of Vodafone (VOD.L) and Sky, which values the provider at £3bn ($3.9bn).

The telecoms giant is understood to have appointed investment bank Lazard to review its options and conduct talks with prospective buyers, Sky News and the Financial Times reported.

Britains telecoms chiefs have been calling for a greater consolidation in the industry, which has been marred by declines in valuations as rife competition in the market led to regulatory pressure.

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It is not the first time that Vodafone, Britain's fifth largest player in the broadband sector, has been tied to TalkTalk, being last linked to a bid in December 2020.

Vodafone has been under pressure to revive its struggling business after Cevian Capital, Europe's largest activist investor took a stake in the company and has been pushing for an overhaul. Acquiring TalkTalk, which says it has 4.2 million customers in total and 2.4 million fibre connections across Britain, could help it scale its business.

TalkTalk was taken private 16-months ago by Toscafund — an asset manager run by the Brexit-supporting Tory donor Martin Hughes — for 97pps, valuing it at £2bn including debt.

At the time the Salford-headquartered group was advised by its independent directors to accept the bid as it would need significant investment in order to scale, which could have been hard to achieve if TalkTalk had remained publicly listed.

TalkTalk, Sky group and Vodafone all declined a Yahoo Finance UK request to comment on the reports.

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Earlier this week, TalkTalk entered into an agreement to acquire Virtual1, a wholesaler of high bandwidth services. Under the deal, Virtual1 CEO and founder Tom O’Hagan will lead the standalone business of 200 people as part of the TalkTalk Group.

In February, communications watchdog Ofcom opened the door to future mergers between mobile networks in the UK amid growing consolidation in the market.

The regulator, pivoting from its long-held belief that a merger between any of the UK’s mobile firms should be blocked at all costs, explained it is not proposing new regulatory interventions in mobile markets at this stage, but is "ready to engage and take action where necessary".

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