UK-based broadband ISP, TalkTalk, has sold its Business Direct unit to TFP Telecoms Limited, a special purpose vehicle controlled by its main shareholders, for £95 million. The transaction also involves a long-term exclusive wholesale agreement with TalkTalk’s wholesale platform worth £25 million over the next three years. The sale represents the first phase of the demerger strategy shared in September, which aims to split the TalkTalk Group into three separate businesses.
The Business Direct Unit, which serves the connectivity needs of approximately 90,000 small businesses, will continue to operate under the leadership of Ruth Kennedy as MD and will remain headquartered in Salford following the deal. TalkTalk Group CEO, Tristia Harrison, commented on the transaction saying it delivers both investment for growth for Business Direct and a long-term revenue agreement for their wholesale platform.
The sale follows TalkTalk's ongoing efforts to tackle pressure from its existing debt pile. As part of this strategy, the company has begun to demerge the group into three separate entities - TalkTalk Consumer, TalkTalk Business Direct and the Wholesale Platform. The company's shareholders will likely continue to search for a third party to acquire 'Business Direct', with any proceeds exceeding the agreed £95 million being passed back to the company.
This development comes after TalkTalk was unable to convert earlier interest from Sky and Daisy Group into a tangible deal. It also marks a contrast from just a few years ago when TalkTalk was willing to invest heavily in Pay TV to compete with rivals such as BT, Sky Broadband and Virgin Media.
In an attempt to stabilize their balance sheet, TalkTalk is implementing cost-cutting measures wherever possible. This includes a 40% reduction in spending on sales and marketing and making redundancies primarily from central corporate functions.
This move follows a £1.1 billion takeover by Toscafund in 2020, which valued the business at around £1.8 billion including debt.
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