TalkTalk dials up effort to salvage future as Octopus deal stalls

TalkTalk Telecom Group, one of Britain's biggest consumer broadband suppliers, was on Monday evening scrambling to find a new buyer for its wholesale network amid growing doubts over the company's future.

Sky News has learnt that TalkTalk, which has about 1.7 million retail customers, is no longer in exclusive talks with Octopus Investments about a deal for its PXC division.

TalkTalk's advisers from PJT Partners, the investment bank, are said to have spent the last 72 hours trying to elicit fresh interest for the business from Epiris, the private equity firm which was in the running to buy PXC earlier in the summer.

The discussions with Octopus - which has been at the centre of a growing row after banning withdrawals from an inheritance tax scheme it operates because of the prospective TalkTalk deal - have not entirely been abandoned, according to insiders.

However, there is now only a remote chance of a deal with Octopus - which manages the altnet Fern Trading - being successfully concluded, they said.

Just four days ago, Octopus and TalkTalk issued a joint statement that "they are optimistic of delivering the proposed transaction and will update stakeholders with further news in due course".

They added at the time: "There can be no certainty of any transaction completing.

The end of exclusive talks involving the Octopus Inheritance Tax Service (OITS) is likely to spark fresh questions from the thousands of investors who have money locked up in it.

Epiris is in the middle of a takeover bid for London-listed Gamma Communications, with which analysts say the PXC business would share substantial financial synergies.

It was unclear on Monday evening, however, whether the buyout firm intended to pursue a fresh offer for PXC, with Epiris understood to have been invited to hold further talks.

The withdrawal of the two leading bidders for TalkTalk's wholesale business would leave the group facing a precarious future.

Bondholders, or the company's largest creditor, Ares Management, could yet be pressed to inject further capital into it.

However, as Sky News reported late last week, Ares is already planning to take control of TalkTalk's consumer arm with the company's founder, Sir Charles Dunstone, expected to become the division's chairman.

A number of restructuring options are being examined with a view to implementing any transactions, with the professional services firm Alvarez & Marsal (A&M) on standby to assist with deals involving the group and its subsidiaries.

TalkTalk is said to have until the end of the month to resolve its future, with another significant payment to BT Group's Openreach division due at that point.

Ofcom, the industry regulator, was reported by the Telegraph over the weekend to be closely monitoring the unfolding situation at TalkTalk.

The newspaper said that BT could be asked to step in to take on TalkTalk's retail customers if the company were collapse.

VodafoneThree has also been named as a potential buyer of the consumer business, with both main operating divisions now likely to be worth no more than £600m collectively.

Sir Charles launched TalkTalk in 2004 with an audacious attempt to capture a big share of Britain's retail telecoms market.

One of the country's most successful entrepreneurs, the Carphone Warehouse co-founder remains a significant shareholder in TalkTalk alongside Toscafund Asset Management, with which he took it private in 2021.

The company was floated on the London Stock Exchange in 2010, when it demerged from Carphone Warehouse.

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 - exacerbated by a haemorrhaging of its retail customer base - meaning the group's valuation has shrunk significantly over the last five years.

Over the last 18 months, its stakeholders, led by Ares, have stepped in repeatedly with new financial support to help stabilise the company.

Ares spearheaded a deal to inject a further £115m into the business, which is heavily debt-laden, as recently as February.

TalkTalk, Octopus Investments, Epiris, Ares and A&M all declined to comment.

(c) Sky News 2026: TalkTalk dials up effort to salvage future as Octopus deal stalls