VodafoneThree enters race for TalkTalk customers with takeover bid

Vodafone has tabled a bid for TalkTalk’s consumer broadband business, joining a crowded auction as the UK’s largest mobile operator pushes into the home internet market.

The FTSE 100 telecoms giant has emerged as a late entrant into the sale process, after initially declining to participate, the Financial Times first reported.

Sources close to the matter told the FT that VodafoneThree was among several groups to submit second-round bids for TalkTalk’s consumer division last week.

New Street Research estimated the business to be worth between £200m and £300m.

A deal would hand VodafoneThree control of around 1.75 million broadband customers, and provide a significant boost to chief executive Margherita Della Valle’s push to expand the group’s fixed-line footprint.

The move comes less than twelve months after Vodafone completed its mega-merger with Three UK, worth £16,5bn and creating the country’s biggest mobile operator with roughly 29 million customers.

VodafoneThree has set a target of doubling its broadband customer base to over four million by the early 2030s, and has been seeking ways to grow beyond its traditional mobile roots.

The firm said it remained “very happy with our organic strategy” in broadband, where it claimed to be “the fastest growing in the market”.

“Of course, we always keep a close eye on movements in the market and the sector”, it added.

TalkTalk has been struggling to stabilise its finances after being taken private in a £1.1bn buyout led by Toscafund back in 2021.

The leveraged deal loaded over £500m worth of debt onto the firm’s balance sheet, leaving the broadband provider exposed as interest rates rose.

Founded by Sir Charles Dunstone, TalkTalk has seen its consumer customer base shrink from over 2.5 million in 2023, to around 1.75 million today, amid intense competition.

The group has relied on repeated support from major shareholder Ares Management, which has injected capital into the business in recent years, as it battled cash flow pressures.

TalkTalk is simultaneously exploring a sale of wholesale arm PXC, with bidders reported to include Octopus Investments and a private equity-backed management buyout led by executive chair Tom O’Hagan.

The firm has also cut hundreds of jobs and sold non-core customer books in an effort to reduce costs.

Its difficulties have occasionally spilled into public view, with Openreach reportedly threatening to block TalkTalk from putting new customers onto its broadband network last year, amid a dispute over late payments.