Ares demands BT payment as TalkTalk teeters on brink of administration

BT Group, the FTSE-100 telecoms giant, is this weekend locked in negotiations with TalkTalk Telecom Group's largest creditor as one of Britain's biggest broadband suppliers teeters on the brink of collapse.

Sky News has learnt that Ares Management, which has pumped more than £380m into struggling TalkTalk since 2024, is demanding a multimillion pound up-front payment from BT to secure its approval for a deal - or face the prospect of a costly legal fight.

Sources close to the situation said Ares had written to BT's board in recent days seeking an urgent resolution of the situation, and reiterating its willingness to take ownership of TalkTalk's retail operation as an alternative to a full repayment of its super-senior debt.

The discussions between BT and Ares come as TalkTalk lurches towards a filing for administration which could come early this week, according to insiders.

Discussions are set to continue throughout Sunday, according to insiders, with a further revised proposal potentially being made by BT to Ares during the course of the day.

BT is likely to take control of TalkTalk by way of a pre-pack insolvency process, after having approached the government last week to ask for a waiver of competition obstacles to a deal.

The fate of TalkTalk's 900-strong workforce under BT's ownership is unclear.

TalkTalk's fate has been hanging in the balance for weeks, with separate discussions taking place with potential buyers for its consumer arm, which serves more than 1.5 million customers, and PXC, its wholesale network.

This weekend, the Telegraph reported that ministers were exploring the use of pandemic-era laws to take control of TalkTalk because of the number of vulnerable customers it serves.

BT is said to have made an initial offer to Ares in the low tens of millions of pounds, followed by an improved proposal during the course of the weekend, both of which were rejected by the US-based investment giant.

The FTSE-100 telecoms group has emerged as the likeliest buyer of TalkTalk since BT rejected a proposal from Epiris - the private equity firm trying to buy PXC - which would have involved foregoing repayment of at least £300m owed by TalkTalk to BT's Openreach subsidiary.

PXC typically pays between £60m and £80m every month to Openreach to lease its infrastructure, making it by far TalkTalk's biggest supplier - with much of that funding in recent years having been the result of support from Ares via a letter of credit to BT.

Insolvency practitioners at Alvarez & Marsal have been lined up to oversee TalkTalk's administration, which would come just over two decades after the company was founded by Sir Charles Dunstone.

Ofcom and Lisa Nandy, the culture secretary, are being kept informed about the unfolding situation.

PXC serves thousands of vulnerable customers as well as hospitals, doctors' surgeries and other areas of critical national infrastructure.

This weekend, Tom O'Hagan, the PXC chairman who has been working with Epiris on its offer, warned that a BT takeover of TalkTalk's network would reverse years of efforts to stimulate competition in Britain's retail telecoms market.

Such a deal, he wrote in The Telegraph, "would create near-total dominance of an important part" of the sector.

As recently as eight days ago, TalkTalk had said that it was "in the final stages of its sales process for the [two] businesses and expects to conclude both transactions imminently."

A collapse into administration would leave bondholders, lenders and shareholders - including Sir Charles and Ares - hundreds of millions of pounds out of pocket.

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

The company was floated on the London Stock Exchange in 2010, when it demerged from Carphone Warehouse, which Sir Charles also co-founded.

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.

Ares, BT, TalkTalk and A&M all declined to comment.

(c) Sky News 2026: Ares demands BT payment as TalkTalk teeters on brink of administration