TalkTalk Sells Business Direct Unit to Shareholders for £95 Million Amid Demerger Strategy

UK-based broadband provider TalkTalk has sold its Business Direct unit to TFP Telecoms Limited, a special purpose vehicle controlled by its major shareholders, for £95 million. The deal also includes a long-term exclusive wholesale agreement with TalkTalk’s wholesale platform, valued at £25 million over the next three years. This sale is part of a broader demerger strategy announced in September, which aims to separate TalkTalk into three independent businesses.

The Business Direct unit, which caters to approximately 90,000 small businesses, will continue to operate under managing director Ruth Kennedy and will remain based in Salford post-sale. TalkTalk Group CEO Tristia Harrison described the transaction as beneficial for Business Direct’s growth and for securing long-term revenue through their wholesale platform.

This sale is a response to TalkTalk’s efforts to manage its existing debt. As part of its restructuring, the company is moving to separate into three distinct entities: TalkTalk Consumer, TalkTalk Business Direct, and the Wholesale Platform. Shareholders are likely to keep looking for a third party buyer for Business Direct, with any funds exceeding the £95 million price going back to the company.

This recent development follows TalkTalk’s struggle to turn previous interest from major firms like Sky and Daisy Group into a concrete agreement. It also contrasts with a few years ago when TalkTalk was actively investing in Pay TV to compete with other providers such as BT, Sky Broadband, and Virgin Media.

To strengthen its financial position, TalkTalk is implementing various cost-saving measures, including a 40% reduction in sales and marketing expenditure and staff cuts primarily from central corporate roles.

This action comes after a £1.1 billion acquisition by Toscafund in 2020, which valued the business at approximately £1.8 billion, including debt.