Virgin Media O2 eyes TalkTalk

Virgin Media O2 is reportedly in talks to buy UK broadband operator TalkTalk.

According to Sky News, the Liberty Global-Telefonica joint-venture has submitted an indicative bid that values the company at around £3 billion.

Talks are said to be at an early stage and on a non-exclusive basis, with rivals including Sky and Vodafone having also stated their interest in recent months. TalkTalk, which went private in 2020, is being advised by investment bank Lazard.

The acquisition of TalkTalk would add 4.2 million customers and 2.4 million fibre connections to VMO2’s 6 million broadband, pay TV and mobile users (O2 alone has 34 million mobile customers).

TalkTalk was founded in 2003 by Sir Charles Dunstone as a subsidiary of Carphone Warehouse. It demerged as a standalone company in 2010, and went on to evolve into a quadruple play operator (though it stopped offering mobile contracts in 2018). It most recently acquired London-based high-bandwidth network services provider Virtual1 in March of this year.

While the UK’s economic state is leading to increasing consolidation, it remains unclear as to whether regulators would approve VMO2’s further expansion through acquisition. 

Nick Reed, the CEO of Vodafone which is itself interested in TalkTalk, has previously called on the UK market to consolidate, with the operator also said to be eyeing a merger with mobile operator Three UK.

While the UK has only a few pay TV operators, the broadband market is very disparate with more than 150 operators currently offering internet connectivity across the UK either regionally or nationally.