Debt-troubled broadband ISP TalkTalk, which was recently saved from the immediate risk of a default by a refinancing package worth roughly £400m (here and here), may now find it even harder to find a buyer after their auditor of 22 years – Deloitte – resigned and was replaced by RSM.
The refinancing agreement came after the Group had already spent much of the past few years wrestling with some suffocating debts, which in 2023 culminated in a plan to demerge the group into three separate businesses (TalkTalk Consumer, TalkTalk Business Direct and the wholesale centric PlatformX Communications – here), while also cutting costs (e.g. marketing) and monetising some assets (e.g. selling IP addresses).
The demerger should have also made it easier to sell off individual parts of the business (selling the entire group has proven tricky) and the first piece to go was technically TalkTalk Business Direct, which ended up being sold to the company’s own shareholders for £95m after struggling to attract much interest (here). But so far there have been no further deals, while reports suggest that a proposed deal with Australian banking giant Macquarie for a stake in PlatformX (PXC) fell through.
According to The Telegraph (paywall), an analyst at New Street Research, James Ratzer, said Deloitte’s resignation “reduces the chance that any company would want to take over TalkTalk”. Suffice to say that TalkTalk may have patched up the still leaky roof and brought itself some time to resolve the underlying problem, but it’s by no means out of the woods yet.
The same newspaper also repeats a claim that Ofcom is “drawing up plans” for a “supplier of last resort” regime in the event of a company collapse in the sector (they’ve been reporting the same thing for the last couple of years), although the regulator has long had a general supplier of last resort process to protect customers. Most of the time, when ISPs have fallen into trouble before, then solutions are usually found to migrate the customer base long before the situation puts them at risk of disconnection. In any case, TalkTalk isn’t yet at such a risk.