Culture secretary and Wigan MP Lisa Nandy has ordered the competition regulator to investigate the planned rescue of ailing Salford Quays-based broadband supplier TalkTalk by BT Group.
Nandy’s decision was revealed shortly after confirmation this morning that BT had agreed a deal to buy TalkTalk out of administration.
The telecoms giant said it had stepped in to save TalkTalk and its wholesale PlatformX Communications (PXC) business from collapse in a “genuinely unprecedented situation” that could have impacted telecoms for 2.5 million customers.
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BT said the deal will “protect continuity of service for its 2.5 million customers, avoiding the risk of material harm to vulnerable customers and key emergency services”.
Administrators at Alvarez & Marsal Europe said the sale will see all 900 employees at TalkTalk’s consumer and broadband business and PXC transfer to BT.
However, the government has now asked the Competition and Markets Authority (CMA) to report back to Nandy by 19 October following a Public Interest Intervention Notice that will allow it to consider the wider public interest of the deal, including BT’s market power in the sector.
Allison Kirkby, BT chief executive, said of its move: “This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed.
“Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk.
“Once the regulatory process has been concluded, TalkTalk’s customers will benefit from access to the UK’s best network, and the full range of market-leading products and services that BT offers.”
TalkTalk was left with little option but to strike a deal with BT after the FTSE 100 company rejected a proposal from private equity firm Epiris relating to TalkTalk’s PXC division.
The pre-pack administration will leave other creditors owed “hundreds of millions” of pounds, which they are unlikely to recover.
Shareholders, including founder Sir Charles Dunstone, will be wiped out.
He launched TalkTalk in 2004 in an attempt to capture a hefty share of Britain’s retail telecoms market. The company was floated on the London Stock Exchange in 2010, when it demerged from Carphone Warehouse, which Dunstone also co-founded. Its 2021 delisting took place at a valuation of about £2bn including debt.
The company has struggled for long periods since then, with cashflow difficulties and a shrinking retail customer base eroding the firm’s valuation. BT shares were 1.6% up in early trading on Monday.
