BT Group spent the weekend negotiating with Ares Management, the largest lender to TalkTalk, which has put more than £380m into the broadband group since 2024. Ares is reported to want either an upfront payment or control of TalkTalk's retail arm, which serves about 1.7 million customers.
TalkTalk Telecom Group, one of Britain's largest broadband suppliers, is close to administration. The company carries a reported £1.4bn of debt and was valued at about £2bn, including borrowings, when it was taken private in 2021.
Sky News reported on Sunday that BT, the FTSE 100 telecoms group, was in weekend talks with Ares Management, TalkTalk's principal creditor. Ares is demanding a payment from BT as the price of its co-operation, according to the report.
The talks centre on a pre-pack insolvency, in which a sale is agreed before administrators are appointed. Alvarez & Marsal has been lined up to oversee the process, Sky News reported last week.
The creditor's position
Ares has invested more than £380m in TalkTalk since 2024, including a £115m injection in February. That exposure gives the US credit investor the decisive vote over any sale.
It is reported to be seeking one of two outcomes: a multimillion-pound upfront payment from BT, or ownership of TalkTalk's consumer business. The size of the payment has not been disclosed.
The retail arm is the group's main source of recurring revenue. Whichever party ends up holding it will determine what BT is actually buying.
A contested wholesale arm
The second asset is PXC, TalkTalk's wholesale division, which pays BT's Openreach between £60m and £80m a month for network access.
The Telegraph reported on Sunday that a rival bid for PXC, led by former TalkTalk executive Tom O'Hagan with private equity firm Epiris, is challenging BT's proposed acquisition of the unit. The rival camp argues that the deal would hand BT near-total dominance of the UK broadband market.
Epiris had earlier been in talks to buy PXC for about £200m, and last week asked BT to waive more than £100m of Openreach payments, according to Sky News. Opus Broadband has also tabled an offer of about £100m, and Vodafone has made contact about a possible bid.
What happens next
Terms of any BT transaction were not disclosed, and none of the parties has confirmed an agreement. Sky News had previously reported that TalkTalk could collapse at the start of this week without a deal.
Any BT purchase of PXC is likely to draw competition scrutiny, given Openreach's position as the network supplier to most of TalkTalk's rivals. For TalkTalk's other lenders, the reported £1.4bn debt pile against bids in the low hundreds of millions points to heavy losses.
Original source: Sky News — https://news.sky.com/story/ares-demands-bt-payment-as-talktalk-teeters-on-brink-of-administration-13594901
