BT, the former UK telecoms incumbent, is reportedly exploring a possible takeover of a struggling Internet Service Provider (ISP).

The Daily Telegraph, citing ‘City sources’ reported that BT is plotting a rescue of TalkTalk as the ISP contends with an escalating cash crisis.

Earlier this week the Financial Times reported that BT’s Openreach had threatened to block TalkTalk from putting new customers on its broadband network, after the heavily indebted ISP had missed several monthly payment deadlines to Openreach due to cash flow issues.

TalkTalk rescue?

According to the FT, the late payments varied in size but amounted to a “small percentage” of the total amount due, estimated at about £60mn per month.

However a person familiar with the matter told the FT that the outstanding bills had now been paid.

Now according to the Daily Telegraph, the former state monopoly is in the early stages of exploring a takeover of TalkTalk and its 3.2 million customers, amid fears its own business could be damaged by the tightening squeeze on TalkTalk’s finances.

Insiders reportedly stressed that internal discussions at BT were at an early stage and that a takeover bid had not yet been discussed with TalkTalk.

But there are reportedly concerns about possible regulatory intervention in such a move, but BT executives are said to be hopeful of receiving backing from Ofcom for the move.

Virgin Media O2 has previously weighed an approach for TalkTalk back in July 2022.

Struggling ISP

TalkTalk is a veteran ISP in the UK market, and was actually founded in 2003 as a subsidiary of Carphone Warehouse, until it was demerged as a standalone company in March 2010.

TalkTalk is led by its founder, Sir Charles Dunstone, but has been struggling for a number of years.

The ISP in January 2020, just before the Coronavirus pandemic engulfed the world, sold its FibreNation (its fibre network in York) and TalkTalk’s shareholding in Bolt Pro Tem Ltd to CityFibre for £200 million.

Later in 2020 it received a takeover offer from one of its principle shareholders, Toscafund Asset Management (TAM). That deal was completed in March 2021 and TalkTalk was taken back into private hands.

Then in 2023 the veteran UK ISP confirmed it would split into three standalone companies focused on business-to-business wholesale telecoms services; consumer broadband; and small businesses, and the then CEO (Tristia Harrison) would step down.

In 2024 TalkTalk reportedly narrowly avoided collapse, and Sir Charles and other shareholders were forced to pump £235 million into the company to stave off the threat of insolvency.

That deal gave TalkTalk some breathing room, but the ISP is still having to contend with a punishing debt burden of £1.2 billion.

During its long existence, the ISP has been rated multiple times among the worst landline and broadband providers in the UK by Ofcom (due to the number of customer complaints).

Indeed, TalkTalk lost 400,000 customers in 2024, and was recently ranked bottom of Ofcom’s latest customer service rankings.

TalkTalk also suffered a heavy hit to its reputation and finances in 2015, when it was rocked by a devastating cyberattack, that resulted in the data theft of 100,000 TalkTalk customers.

That cyberattack cost the ISP more than £60 million in lost revenue and exceptional costs, as well as the loss of tens of thousands (said to be 95,000) disgruntled customers.