BT Group has acquired TalkTalk Telecommunications and PlatformX Communications (PXC) out of administration on a debt-free basis, securing continuity of broadband services for around 2.5 million customers.

The deal was completed overnight following a settlement with TalkTalk’s largest lender, Ares Management, which BT agreed to pay around £100m to resolve the weekend impasse with creditors and avoid a potentially prolonged legal dispute.

FTSE 100 telco incumbent BT acquired both TalkTalk’s consumer retail business and PXC’s wholesale operations after an unsuccessful sale process raised the risk of the group collapsing and disrupting services to vulnerable households and critical infrastructure.

The acquisition followed an unsuccessful sale process for TalkTalk’s consumer and wholesale operations. BT said the move was necessary to avoid the potential disruption caused by the group’s collapse, particularly for vulnerable households and services supporting health, emergency services, defence, education, transport, banking and government.

Allison Kirkby, CEO of BT Group, said: “This is a genuinely unprecedented situation, where millions of citizens and businesses were at risk if TalkTalk had collapsed. BT is the digital backbone of the country, with a presence in every postcode. We have been connecting the nation for generations, stepping up in the moments that matter, and BT acquiring TalkTalk is now the only viable option to keep millions of customers connected and supported.”

The acquired business reported revenue of around £1.2bn over the past 12 months but was loss-making. BT estimated the total cash impact of the transaction in FY27 at around £400m, including consideration, transaction and administration costs, working capital impacts, a trading loss of around £60m for the remainder of the financial year and £100m that would otherwise have been received from Openreach.

Kirkby added: “Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk. Once the regulatory process has been concluded, TalkTalk’s customers will benefit from access to the UK’s best network, and the full range of market-leading products and services that BT offers. And, over a period of time, the transaction will create value for all our stakeholders – customers, colleagues, the country, and our owners.”

TalkTalk, based in Salford, Greater Manchester, was founded in February 2003 in Leeds, England, originally as a subsidiary of Carphone Warehouse before being spun off as an independent company in 2010. It grew into one of the UK's largest broadband providers and was listed on the London Stock Exchange until it was taken private in 2021.

Subject to regulatory approval, customers would ultimately gain access to BT’s network, products and services, while the transaction was expected to become value accretive as the business was stabilised and synergies realised.

BT said it would report the acquired business as a separate segment in FY27 and provide further details on the impact on revenue, core earnings and capex once its financial reporting had been aligned with BT’s accounting policies.

Excluding the acquisition, BT reconfirmed its FY27 and multi-year financial outlook, including normalised free cash flow of around £2.0bn in FY27 and around £3.0bn by the end of the decade. It also reiterated its commitment to a BBB+/Baa1 credit rating target and low to mid-single-digit annual dividend growth.

BT shares were up around 1.5%-1.7% in early London trading, rising from Friday's close of 196.3p to about 199-200p.

A regulatory review is expected to take place over the coming weeks, with TalkTalk and BT operating separately and continuing to compete in the meantime.

DCMS secretary of state Lisa Nandy has also intervened under public interest rules.

"Phone and broadband services are vital national infrastructure. If TalkTalk services fail, there is a genuine risk to life and public services – including to hospitals, schools and emergency care," Nandy said.

"These are unprecedented circumstances that require action now. That is why I am acting with urgency to ensure that impacts on public health, critical national infrastructure and supply to vulnerable customers are fully considered as part of this process."

She specified that the Competition and Markets Authority (CMA) should report back to her by 19 October. The CMA for its part announced this morning that it is investigating the completed acquisition and is inviting comments which close on 9 October.

---