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The debt strained TalkTalk Group, which has already been through a demerger of its businesses and last year secured a £400m refinancing package to avoid a default on its debts (here, here) – not to mention the latest £120m funding deal to help tackle recent financial pressures (here), is reportedly set to appoint advisers PJT Partners to help sell off its remaining operations.
The long-established UK internet and phone provider – home to 3.2 million broadband customers (down c.400k from last year) – has spent the past few years trying to find ways of dealing with the pressure from its existing debt pile. Over that time we’ve seen the group being demerged into three separate businesses (Talk Talk Consumer, Talk Talk Business Direct and PXC [Wholesale]), as well as various asset sales, job cuts, offshoring of support, cost-cutting / efficiency savings and all sorts of other measures to try and fix the foundations.
Suffice to say that the group is still not out of the woods. In fact, not a year seems to go by when we don’t hear word of their continuing efforts to hunt a buyer for different parts of their business (here), albeit so far without much success.
The latest development, according to Sky News, is that TalkTalk appear to be in the process of appointing investment bank PJT Partners to conduct a Strategic Review of their operations, which will be aimed at securing a disposal (sale) of its remaining businesses. Regular readers might be forgiven for experiencing a strong sense of deja vu.
Selling off the group’s consumer broadband ISP (TalkTalk) and wholesale division (PXC) has so far proven to be more than a little difficult and is expected to take some time. TalkTalk’s Ethernet subsidiary (currently part of PXC) could potentially also be sold off on a standalone basis, according to insiders.
Finding a buyer for such a large retail provider would be difficult, not least since most of their base often comes linked to their own wholesale (PXC) platform / network and any alternative networks with an interest would need to figure out how to migrate those (PXC might not like that idea). Equally, even some of the biggest retail ISPs would need to scale-up rapidly in order to take on the extra support and service burdens that come with such a sizeable base.
At present, the likes of Vodafone and Sky Broadband are probably better bets than BT or Virgin Media for TalkTalk’s retail base, partly due to their packages and operations being more closely aligned with TalkTalk’s retail business. But Sky has just cut hundreds of jobs (here) and so may not be in the best position, while it’s unclear whether Vodafone would have the appetite while their teams are already busy integrating operations after their merger with Three UK.
Finally, competition and other market regulators (e.g. Ofcom) are likely to take an interest in such a deal, which probably rules out BT (their existing retail scale would make this very difficult). Time will tell. TalkTalk is said to have declined Sky’s request for a comment.