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A newspaper has claimed that telecoms giant BT (EE, Plusnet etc.) is allegedly in the “early stages of exploring a takeover” of debt-laden broadband ISP TalkTalk. The news follows only days after Openreach reportedly threatened to block the troubled internet provider from adding new customers (here) due to concerns over delayed payments.
Firstly, we’re going to assume that most of our readers are now fairly familiar with the roller coaster ride of events around TalkTalk, which last year secured a crucial refinancing package worth c. £400m (here and here) – saving it from the immediate risk of a default on its debts. Nevertheless, the ISP recently reported losing around 400,000 customers in the year (total of 3.2m) and, as above, has experienced a few disputes (here).
According to the Telegraph, BT is now said by “insiders” to be exploring the possibility of making a bid for the struggling ISP. The news comes amid fears that its own network access business, Openreach, could be damaged by TalkTalk’s financial challenges (Openreach holds around 3 million of their broadband base, with CityFibre accounting for c.150,000).
However, the report claims that BT has yet to formally propose such a bid to TalkTalk, which in any case would first need the nod of approval from both Ofcom and the competition regulator (CMA). But securing such approval would be extremely difficult and take a lot of time, not least due to BT’s own position as the market’s largest retail broadband provider and TalkTalk’s strong ties to rival networks.
The period of uncertainly all this would create might also risk accelerating TalkTalk’s problems by fuelling more uncertainty for customers. Suffice to say that we have our doubts about today’s new report, although there is little doubt that TalkTalk has plenty of problems.
Ofcom does also have a Supplier of Last Resort (SoLR) process to protect customers in the event of a big ISP failure. In that case, not many ISPs, except BT, would have the available scale needed to rescue a base of TalkTalk’s size in a short space of time, and that’s before we get into the complexity of their arrangements with altnets etc.
As usual, neither BT nor TalkTalk have commented on the new report, which for now should be taken with a pinch of salt.