Vodafone expects telecommunications mega-merger of 3 billion pounds: TalkTalk returned to the unit just a year after the purchase
- The move comes a year after TalkTalk went private as part of a £ 2bn deal
- Talk Talk advisor, Lazard Investment Bank, is developing approaches
- Apart from Vodafone, Sky is considered to be another possible buyer
Goal: Current TalkTalk CEO Tristia Harrison
Vodafone is driving rival TalkTalk over a possible mega-merger that could spark unrest in the telecommunications sector.
The owners of TalkTalk, one of the UK’s largest broadband providers, have hired bankers to discuss a possible sale, which estimates the company is valued at £ 3 billion.
The connection between them will be the last attempt at unification this year, which will take place almost three months after it emerged that Unilever was trying to buy GlaxoSmithKline’s consumer health division.
The move comes a year after TalkTalk went private as part of a £ 2bn deal led by hedge fund Toscafund, run by Tory brixite donor Martin Hughes.
TalkTalk was previously included in the FTSE 250 list.
Hughes is known in urban circles as a “rottweiler” because of his aggressive style when he campaigned for changes in the firms in which he invests.
Longtime advisor to Talk Talk, Lazard investment bank, is choosing approaches and looking for potential buyers, although no official offers have been received yet, Sky News reports.
Apart from Vodafone, another possible buyer is Sky, owned by the American media giant Comcast. TalkTalk and Vodafone declined to comment. TalkTalk has around 4.2 million customers and 2.4 million fiber broadband connections across the UK, as well as a pay-TV service that includes both Sky and BT Sport channels.
The firm was founded in 2003 by Sir Charles Dunston and was originally part of the Carphone Warehouse retail chain, and in 2010 was split into a separate company.
TalkTalk was a lucrative business for a 57-year-old man who, according to Forbes, has a fortune totaling around £ 769 million.
He took over as chairman in 2017 after then-CEO Spear Harding resigned after a massive cyberattack that affected tens of thousands of customers.
She later went on to run the government’s Covid-19 testing and tracking scheme before leaving it in April amid strong criticism.
The company’s current CEO is Tristia Harrison, who is married to former Carphone Warehouse CEO Andrew Harrison.
Acquisition of Talk Talk would give the buyer a significant boost in the long struggle to capture market share in the fast-expanding ultra-fast internet market. It is also the latest step in the quest to consolidate the telecommunications sector, which has suffered from cost reductions in recent years. Some industry representatives said it was suffering from excessive competition as major players and smaller competitors were fighting for customers, lowering prices and holding back investment in the UK’s digital infrastructure.
Vodafone is under pressure from Cevian Capital, one of Europe’s largest investor activists, which earlier this year revealed it bought out a stake in the group and has since sought to restructure the business.
However, some city residents believed that Vodafone’s raid on TalkTalk could provoke a reaction from investors.
“When Vodafone starts acquiring, many people will ask why they didn’t do it the last time TalkTalk was put up for sale,” said Carl Murdoch-Smith, a telecommunications analyst at investment bank Berenberg.
He added that although TalkTalk was small compared to Vodafone, whose market capitalization is nearly £ 36 billion, any acquisition is likely to be perceived by its shareholders as “bad”.
“Investors are looking for Vodafone to sell or merge rather than acquire substandard operators,” MurdochSmith said.
Others are concerned that tying may attract the attention of competition regulators. Shares of Vodafone rose 0.7 percent, or 0.84 pence, to 127.68 points.
Vodafone expects £ 3 billion telecommunications mega-merger with TalkTalk
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