TalkTalk gets engaged tone as buyers close in on £200m break-up

TalkTalk Telecom Group is closing in on a £200m deal to break itself up as its biggest lender again emerges as the leading contender to take control of one of Britain's biggest broadband suppliers.

Sky News has learnt that Ares Management was on Tuesday morning regarded as the likeliest bidder to gain ownership of TalkTalk's consumer arm as the private equity firm Epiris progresses a roughly £200m transaction to acquire PXC, the group's wholesale network.

City sources cautioned that the situation remained a fluid one and said the outcome could still change.

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As things stand, they said, the disposals of TalkTalk's consumer and wholesale divisions are likely to be implemented by way of a pre-pack administration process, with the appointment of Alvarez & Marsal (A&M) to handle an insolvency process possible as soon as this Thursday.

If Ares does take control of the retail arm, which has about 1.7 million customers, the asset management group would be unlikely to make 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, remains interested in a deal, although it now appears to be a less likely buyer than Ares.

Industry sources said that Vodafone, which had previously been linked with a bid for TalkTalk's retail operation, had also made contact with TalkTalk's advisers in the last 48 hours, although it was unclear how serious its interest was.

Epiris stepped back in to buy PXC last week after the termination of exclusive talks between TalkTalk and Octopus Investments.

The private equity firm, which is preparing a bid for London-listed Gamma Communications, is racing to finalise an offer for PXC alongside Tom O'Hagan, the division's executive chairman.

If that were to fall through, BT Group is likely to be asked to step in to take over the wholesale business, which it would otherwise be unlikely to pursue because of competition hurdles.

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

TalkTalk is due to make a payment of between £60m and £80m to BT's Openreach arm on Wednesday, in line with its usual monthly payment schedule, underlining the urgency of resolving TalkTalk's financial difficulties.

In a statement last Friday, TalkTalk confirmed that 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.

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, Ares and Epiris declined to comment on Tuesday morning, while Vodafone has been contacted for comment and Opus Broadband could not be reached for comment.

(c) Sky News 2026: TalkTalk gets engaged tone as buyers close in on £200m break-up