(Bloomberg) -- BT Group Plc bought TalkTalk and PlatformX Communications Ltd. out of administration to prevent the UK broadband provider from collapsing.
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The deal, which is expected to have a total cash impact of £400 million ($529 million) for the 2027 fiscal year, was made "in the public interest" after talks to sell TalkTalk's consumer and wholesale businesses fell through, BT said in a statement on Monday.
"This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed," BT Chief Executive Officer Allison Kirkby said in the statement. "Our immediate priority is to stabilize the business and provide a safety net for the households and businesses who rely on TalkTalk."
TalkTalk has struggled under its debt load since it was bought out in 2021 by Toscafund Asset Management LLP and private equity firm Penta Capital. The company was founded as a low-cost broadband provider, reselling wholesale access on BT's network to consumers. However, high levels of competition and persistent inflation undermined its business.
TalkTalk ended talks with Octopus Investments to sell its wholesale network division, Sky News reported last month. That came after discussions with the private equity firm Epiris didn't result in a deal.
The two companies will continue to work separately while regulators review the deal.
UK State Secretary for digital Lisa Nandy will weigh wider public interest when reviewing the Competition and Markets Authority's report on antitrust concerns. Critical infrastructure, including emergency services and hospital communications rely on TalkTalk's services, Nandy's department said in a statement.
Kirkby sought government assurances beforehand that a takeover of TalkTalk would not trigger an in-depth antitrust review, the Financial Times reported previously.
Over the last year, TalkTalk reported revenues of about £1.2 billion and was loss-making. The company has about 1.5 million retail customers and 1 million wholesale customers in the UK.
(Updates with details of previous talks, other details starting in the fifth paragraph.)
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