The owners of TalkTalk have apparently have received ‘tentative approaches’ about a sale worth £3 billion, with Vodafone and Sky among the suitors.
According to report from Sky News Vodafone and Sky are among firms considering making an offer for TalkTalk, while investment bank Lazard is apparently fielding approaches from prospective buyers and investment banks. The report claims telecoms industry sources said on Friday that Sir Charles Dunstone, TalkTalk’s founder and chairman believes the company is now worth at least £3 billion.
However one source apparently stressed that TalkTalk hadn’t actually any formal offers and stated that there was no certainty that any would be forthcoming. Meanwhile the FT claims ‘people with direct knowledge of the matter’ say Vodafone has looked at the possibility of doing a deal with TalkTalk multiple times in the past ‘but has tripped up over questions around the value of the business.’
“Both TalkTalk and Vodafone are in a precarious position,” Paolo Pescatore, Analyst at PP Foresight, told Telecoms.com. “Strategically they complement each other as TalkTalk is stronger in fixed line and Vodafone in mobile. A marriage of convenience make sense given the rapidly converged landscape but both cater to different market segments.
“Convergence remains an Achilles heel for both as adoption among their respective bases has been lacklustre. Ultimately scale is key and with this in mind a move to merge could make sense. There are few strategic moves left in the UK. However, Vodafone will need to move quickly to avoid losing further ground as it has done in Italy and Spain.
“Any move by Sky will consolidate its position in fixed line and pose a greater threat to BT.”
TalkTalk is a major player in the broadband space and for Vodafone – which has not been part of the sort of mobile operator/broadband provider M&A that has seen EE and O2 teamed up with BT and Virgin Media respectively – you can see why such a swoop might make sense. But TalkTalk relies on wholesalers for its networks, so this wouldn’t really be an equivalent piece of M&A and would serve mainly to boost the Vodafone broadband customer base, as it would for Sky.
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