Virgin Media O2 explores bid for rival TalkTalk

theguardian.com:

Virgin Media O2 has explored making a multibillion-pound offer for broadband and the telecoms company TalkTalk in its latest move to build scale to create a new “national champion” to challenge BT and Sky.

The pay-TV, broadband and mobile company, which is jointly owned by Spain’s Telefonica and John Malone’s Liberty Global, is understood to have held exploratory talks with the Salford-based TalkTalk.

BT’s share price plunged by 7% on the emergence of news of a potential deal, as investors reacted to the prospect of Virgin Media 02 strengthening its position in the market.

Virgin Media O2 has 6 million broadband, pay-TV and mobile users, while O2 has 34 million mobile customers. Acquiring TalkTalk would add more than 4 million more pay-TV, telephony and broadband customers.

TalkTalk, founded and chaired by Sir Charles Dunstone, has been in play since April when it emerged that the company had received a number of tentative approaches about a sale.

Companies including Vodafone and Sky have previously been linked with potential offers for the business, which was taken private in a £1.8bn deal with Martin Hughes’s Toscafund in late 2020.

It is understood that TalkTalk and its bankers Lazard believe the business is now worth as much as £3bn. Virgin Media O2, which is working with LionTree, is understood to have explored the possibility of making an offer for TalkTalk but has not tabled a formal bid.

If a deal was to go ahead it would be the first big move by the chief executive, Lutz Schuler, since the £31bn Virgin Media O2 joint venture was formed two years ago.

Virgin Media O2’s potential interest in a deal with TalkTalk was first reported by the Telegraph.

The UK is poised for a potential wave of consolidation in the telecoms