Government officials and telecoms regulators are reportedly preparing for the possibility that broadband giant TalkTalk could enter administration within days, amid concerns over the impact on customers and critical services.
TalkTalk, Britain’s fourth-largest broadband provider with around 1.5 million customers, could appoint administrators as early as next week if efforts to secure a rescue deal fail, according to a report by The Telegraph.
Officials responsible for critical infrastructure are said to be in close contact with senior civil servants and telecoms regulators as contingency plans are considered.
The concerns include ensuring TalkTalk’s network and services can continue operating should the company become insolvent.
Concerns over critical services and vulnerable customers
TalkTalk provides consumer broadband as well as services used by large organisations.
According to the report, some networks relied upon for national security are partly dependent on TalkTalk systems, prompting concerns about the potential consequences of disruption.
The company is also reported to serve more than 250,000 vulnerable households, including customers who depend on connected medical equipment and personal alarm systems.
Regulator Ofcom has sought assurances from potential bidders that vulnerable customers would be protected under any solvent rescue deal.
Rescue talks continue
TalkTalk and its advisers were still working on Thursday night to complete a complex plan involving the sale of its consumer and wholesale operations as going concerns.
However, negotiations surrounding a proposed sale of wholesale business PXC to Octopus Investments for around £300 million had reportedly faltered.
A separate offer from Opus Broadband for TalkTalk’s consumer operation was reported to have been reduced to £100 million.
Shareholders and lenders could potentially provide further financial support. They have already injected around £350 million in emergency funding over the past two years, according to the report.
TalkTalk’s debt burden is reported to have climbed to around £1.4 billion.
Possible BT role discussed
One contingency reportedly being considered would involve transferring control of TalkTalk to BT in a form of “supplier of last resort” arrangement if insolvency occurs.
However, such a move could raise significant competition and practical issues because of the size of the customer base involved and TalkTalk’s existing equipment in telephone exchanges.
No decision to place TalkTalk into administration has been announced.
A government spokesman described the situation as a commercial matter and declined to comment on speculation.
Ofcom said: “While we have no formal role in this process, we’re closely monitoring developments.”
TalkTalk declined to comment.
