Fears have been raised that if telecommunications company TalkTalk crashes into administration, Britain’s national security will be left at risk.
Britain’s fourth-largest broadband provider covers services vital to national security – including the Ministry of Defence.
Senior officials responsible for critical infrastructure are thought to be in regular contact with senior civil servants and telecoms regulators to ensure TalkTalk remains operating in the event of insolvency.
The company, which provides both consumer broadband and secure services for large organisations, could appoint administrators as soon as next week.
TalkTalk had hoped to sell off the wholesale arm of its business, PXC, to Octopus Investments, and to sell off its retail division to Opus Broadband.
But Octopus Investments has left talks to purchase the wholesale arm, and Opus Broadband has tabled an offer of £100million – half of its initial evaluation and not enough to save the firm.
Both revelations have increased the chance of entering administration unless billionaire founder Sir Charles Dunstone and investment group Ares Management inject further cash into the company, having already provided £350million in emergency funding in the last two years.
That sum includes an additional £115million given by Ares as recently as February, according to Sky News.
Sir Charles Dunstone founded TalkTalk originally as part of Carphone Warehouse
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Sir Charles remains a major shareholder of the company, and the risk of administration has placed increased scrutiny on the Carphone Warehouse founder.
In 2020, he conducted a debt-fuelled buyout of the company alongside private equity and credit funds, ending its listing on the London Stock Exchange and saddling it with debt.
The debt burden is believed to have climbed to over £1.2billion, while the firm’s business has declined.
Ministers are now racing to understand if keeping the network online would hit the taxpayer, according to The Telegraph.
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Attempts to sell two arms of TalkTalk have faltered in recent days
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Complications have arisen because there is no special administration regime in the telecoms industry – as there is in water.
Ofcom regulators are looking for guarantees from potential buyers to protect vulnerable customers who rely on TalkTalk based-networks for dialysis machines and personal alarms for the elderly, industry sources said
One option under consideration is a transfer to BT as a “supplier of last resort”.
But it is unclear if BT would even want the business and how rivals would react.
Ofcom said it was ‘closely monitoring’ developments around TalkTalk’s potential administration
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If no buyer comes through, private credit giant Ares could take long-term control of the consumer-facing side of the business, with Sir Charles moving to a largely advisory role.
It would mark a dramatic end for TalkTalk, originally part of his Carphone Warehouse empire, and, in 2006, offered “free broadband forever”.
A Department for Digital, Culture, Media and Sport spokesman said: “This is a commercial matter, and we do not comment on speculation.”
An Ofcom spokesman said: “While we have no formal role in this process, we’re closely monitoring developments.”
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