BT swoops for TalkTalk in rescue deal after fears collapse could pose national security risk

BT has agreed to buy troubled broadband provider TalkTalk out of administration to rescue it from collapse. 

TalkTalk had been seeking a buyer for its consumer and wholesale businesses, PlatformX Communications, for months as its debt pile swelled. 

BT today said it had bought both TalkTalk and PlatformX Communications after 'an ultimately unsuccessful, sale process'. 

The potential collapse of TalkTalk had raised national security concerns, with the government in contact with the company given its key role serving households and businesses as well as providing telecoms services to the Ministry of Defence. 

Rescued: TalkTalk will be bought by BT and operate as a separate brand 

It is believed that national security networks are partly dependent on systems operated by TalkTalk’s PXC wholesale network – though the MoD is said to have contingency plans in place to ensure it is not reliant on just one provider.

Culture secretary Lisa Nandy intervened on Monday, citing risks to public services and vulnerable customers if the broadband provider's services were disrupted.

In a statement to investors, BT said it ‘recognised the risk to the country, and especially vulnerable customers and key public services, should the company collapse.’ 

It said the takeover would provide 'much needed and immediate reassurance' to staff and customers. 

The company expects a regulatory review of the deal to take place over the coming weeks, after which TalkTalk and BT will operate separately and continue to compete.

Allison Kirkby, Chief Executive of BT Group, said: 'This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed.'

She added: '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. And, over a period of time, the transaction will create value for all our stakeholders – customers, colleagues, the country, and our owners.'

BT said it expects a £400million cash impact from the deal in the 2027 fiscal year with consideration and other cash impacts. 

A sale of TalkTalk's operations have been protracted, as different firms eye each of the company's arms. Rival Opus Broadband had reportedly been considering a takeover of its consumer arm while Octopus Investments was looking to buy PXC. 

TalkTalk was founded by Sir Charles Dunstone in 2003 as a subsidiary to mobile phone retailer Carphone Warehouse. It was spun off and floated on the London Stock Exchange in 2010.

The firm has struggled amid an increasingly competitive market in recent years, with new challengers and undercutting many of the established providers.

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