Virgin Media O2 submits bid for UK rival TalkTalk

Virgin Media O2 has submitted a proposal to TalkTalk’s smaller competitor, as telecom groups in the UK seek to integrate into a highly competitive and fragmented market, according to people familiar with the subject.

Virgin Media’s proposal, owned by Telefonica and Liberty, for private ownership TalkTalk Estimates the group at around £ 3bn, according to Sky, which first reported the approach.

In early April, TalkTalk owners asked investment bank Lazard to do so Check out his options After several companies, including the telecom company Vodafone, contacted the British broadband company about potential deals, according to people who were briefed on the subject.

There are four key companies in the UK broadband market – BT, Sky, Virgin Media O2 And TalkTalk. A combination of Virgin Media O2, which has about 20% market share, and TalkTalk, which has 14%, may create the second largest broadband provider.

Telecom companies across Europe are pushing for greater consolidation in their domestic markets, arguing that the range of companies providing cellular and internet contracts has created excess competition, lowered prices and stifled investment. But regulators have long been resilient to these deals, fearing they will lead to rising prices for consumers.

Virgin Media declined to comment. TalkTalk did not immediately respond to a request for comment.

“Virgin Media has been saying for several years that it will be interested in a discounted sub-brand so that makes sense,” said James Burford, an analyst at Enders Analysis. “Virgin Media can also over time move TalkTalk to its network, and it will be very lucrative,” he added, noting that TalkTalk only bought Internet services from wholesale providers like BT’s Openreach.

BT’s share price fell more than 8% before closing on Friday.

“I think regulators will remain extremely skeptical about mobile mobile mergers and fixed mobile mergers,” Barford said.

Vodafone, the fifth largest player in the broadband market, has examined the possibility of making a deal with TalkTalk several times in the past, but has stumbled upon questions about the value of the business, according to people with direct knowledge on the subject. .

An official offer from Virgin Media O2 could increase pressure on Vodafone CEO Nick Reed to make a counter-offer, which regulators may view more positively.

TalkTalk was Taken privately just 19 months ago By Toscafund, a hedge fund managed by Martin Hughes, for 97p per share, which estimates the company at £ 2bn, including debt.

TalkTalk’s latest annual report showed its customer base shrank from 4.3 million broadband customers in 2019 to 4 million in 2021. Revenue also fell from £ 1.6 billion in 2019 to £ 1.4 billion In 2021, though the company said it was because of the financial year of 2021. Included only 11 months instead of the usual 12 months, and also because of the impact of Covid-19 limits. Net debt increased to £ 972 million, from £ 950 million. T in 2020.

Charles Dunston, the company’s co-founder, became chairman after Dido Harding resigned as CEO in 2017 following a malicious cyber attack that hit tens of thousands of customers.

Dunston supported a £ 1.1 billion offer to take TalkTalk privately, which was conditional on him rolling out his share to a new private car to be owned by the company, which would allow him to keep his 30 per cent holding.

Virgin Media O2 submits bid for UK rival TalkTalk Source link Virgin Media O2 submits bid for UK rival TalkTalk

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