TalkTalk bidder Epiris seeks £300m BT waiver to dial up rescue

BT Group is being asked to forego payments from TalkTalk's wholesale arm worth about £300m as the outcome of rescue talks for one of Britain's biggest broadband providers enters its final stages.

Sky News has learnt that the private equity firm Epiris has asked BT's Openreach division for a three-month payment holiday in the event of it reaching a deal to buy TalkTalk's PXC arm.

That waiver would be worth in the region of £200m-£250m, while PXC still has outstanding debts to Openreach of roughly £100m following a partial payment made this week, according to industry sources.

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BT has yet to provide a formal response to Epiris's request.

Sky News revealed on Wednesday that rejecting the proposal from Epiris could pave the way for BT to take control of PXC despite the apparent competition hurdles to doing so.

Allison Kirkby, BT's chief executive, met government officials this week to discuss the situation, the Financial Times reported on Thursday.

City sources said that Epiris planned to invest "a substantial sum" into PXC if it bought the business via a pre-pack insolvency process.

Epiris is also understood to be proposing an opportunity for Openreach to share in the proceeds of any future sale of the division above an undisclosed threshold.

PXC typically pays between £60m and £80m every month to Openreach, making it by far TalkTalk's biggest supplier.

Epiris, which is in the midst of a takeover bid for London-listed Gamma Communications, could walk away from the talks if the payment waiver request is rejected by BT.

Both the sale of PXC to Epiris and that of TalkTalk's consumer arm to Ares Management, the group's biggest lender, would be implemented by way of pre-pack administration , which enables businesses to be sold shorn of some of their financial liabilities.

If an orderly pre-pack - which would be overseen by insolvency practitioners at Alvarez & Marsal - cannot take place, TalkTalk is likely to collapse by the start of next week, with BT the obvious buyer as the government seeks to avoid hundreds of thousands of customers having their broadband supply cut off.

Ofcom, which denied industry rumours that it had drafted in its own professional advisers, and Whitehall are both being kept informed about the talks.

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

If Ares does take control of the retail arm, which has about 1.7 million customers, it would not do so by making a significant cash payment, according to people close to the process.

Sky News revealed earlier this month that Ares was lining up a deal for the consumer business with TalkTalk's founder, Sir Charles Dunstone, expected to become chairman but not hold an equity stake.

Opus Broadband, which made a revised, cut-price offer of about £100m for the division last week, has confirmed its interest in a deal but is now a less likely buyer than Ares.

In a statement last Friday, TalkTalk confirmed it was in advanced negotiations about the disposals.

"The company is now in the final stages of its sales process for the businesses and expects to conclude both transactions imminently," it said.

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

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.

Epiris, TalkTalk and BT all declined to comment.

(c) Sky News 2026: TalkTalk bidder Epiris seeks £300m BT waiver to dial up rescue