BT agrees rescue deal to buy broadband operator TalkTalk

The UK’s biggest broadband provider, BT, has agreed to buy rival operator TalkTalk to save the company from collapse.

The takeover would end of months of speculation over the future of TalkTalk and mean services for its millions of customers will continue as normal.

BT boss Alison Kirkby said it provided “a safety net” for TalkTalk customers. The administrator, Alvarez & Marsal, said it also provided certainty for TalkTalk’s 900 staff based in Salford, Greater Manchester.

However, Virgin Media called it a “stitch-up” which allows BT to “tighten its grip” over the market. The government has given itself the power to have the final say on the deal, citing its importance to vital public services.

TalkTalk has 1.5 million retail customers and one million wholesale customers across the UK.

BT’s Kirkby told the BBC’s Today programme: “Two and a half million customers, including vulnerable households, and key emergency services might have lost their services if Talk Talk had failed, which it was on track to do.

“So BT stepped in as we were the only viable option to take the business forward.”

Ernest Doku from comparison website Uswitch said the deal means “nothing changes today”.

“Your broadband and landline carry on as normal, and there is nothing you need to do right now,” he added.

However, he said that BT should explain “quickly and plainly what this means for contracts, prices and service in the future, so nobody is left guessing”.

The regulator, Ofcom, says broadband customers should have the right to leave a contract without an exit fee, external if a new owner puts the price up beyond what was in the contract.

TalkTalk began as a challenger to BT in the broadband market. It was listed on the London Stock Exchange, but was taken over by private equity in 2021.

Since then, the firm has built up debt while losing customers, leaving it unable to pay some of those it owes money to.

Despite this, TalkTalk remained the fourth biggest broadband provider in the UK, with 6.6% of customers, during the March to June period of this year, according to figures from analytic firm Opensignal.

BT has 32.5% of customers, Sky 19.9%, and Virgin Media 19.1%.

Rivals who were beaten to the deal by BT have said it will be bad for consumers.

Tom O’Hagan, a former TalkTalk executive who was leading a takeover bid for the firm, told the BBC he was worried about “reduced choice and potentially an increase in price for consumers and for businesses” because of the BT deal.

He added that he was particularly concerned about competition in the wholesale market, where TalkTalk’s subsidiary PXC was BT’s main rival.

Virgin Media, which has also reportedly tried to buy TalkTalk in the past, said the BT takeover has “all the characteristics of a stitch-up masked as a rescue deal in the public interest”.

It added that the purchase means BT can “roll its tanks over competition and further tighten its grip on the market. The logic simply doesn’t add up.”