There is no disguising the reality that BT chief executive Allison Kirkby’s swoop on ailing TalkTalk is a fast-track deal.
Other potential buyers such as Virgin Media and private equity outfit Ares are crying foul – with the bid sealed behind closed doors with support from the Department for Digital, Culture, Media and Sport on the advice of regulator Ofcom.
It was important for the Government to ensure that 2.5m TalkTalk clients – 1.5m direct and another million through third parties – are not cut off from broadband.
In the current digital age where so many people work from home, and public services such as HMRC and the benefits system are online, a cut-off would have been horrendous.
It would have placed TalkTalk’s 900-person workforce in immediate jeopardy.
The case for BT getting the green light to ensure continued broadband service, still to be confirmed by the Competition and Markets Authority (CMA), is strong.
BT is to buy broadband supplier TalkTalk out of administration in a £400m rescue deal that will save 900 jobs
There is also a commercial rationale. BT is among the creditors, with TalkTalk running up bills, which it cannot pay, of around £100million a month for access to BT’s Openreach arm for use of its network backbone and fibre.
Ideally, there would have been an open auction with Virgin, Vodafone, private equity and other bidders allowed in.
In contrast to the water and power utilities, until now there has been no safety net for telecoms providers. This has been a regulatory lacuna, which Culture Secretary Lisa Nandy will now correct.
Readers will know BT used to be a regular recipient of Money Mail’s wooden spoon for rubbish service.
That may have changed, but we all know people who complain bitterly about current marketing, from confusing broadband tariffs to high-pressure efforts to persuade landline customers to adopt digital phones.
One trusts Clive Selley of Openreach, previously in charge of bringing fibre to people’s homes, will provide some reassurance for TalkTalk users.
BT estimates the cost of the deal, the first takeover by Kirkby, at close to £400million.
It buys TalkTalk free of the £1.5billion debt built up in recent years as founder Charles Dunstone and associates have sought to keep it out of the knacker’s yard.
Private equity firms have been snooping around looking to buy all or parts of the business.
Selling a highly indebted company to private equity, which would only load it up with new leverage, would have been daft.
The hurried rescue of TalkTalk by BT is far from perfect. In perilous circumstances, it is better than the other choices.
> BT swoops for TalkTalk in rescue deal
Shopping around
Disclosure that Sainsbury’s held talks with private equity-owned Morrisons comes as no surprise.
In the seven years that have passed since an overconfident former chief executive, Mike Coupe, thought he could orchestrate a Sainsbury’s merger with Asda, the grocery market has changed radically.
Morrisons and Asda have suffered under the burden of indebted private equity ownership. Grocery market leader Tesco’s market share has raced ahead and is on course to hit 30 per cent.
No-frills German upstarts Aldi and Lidl, once seen by senior Sainsbury’s executives as a flash in the pan, have grabbed 19.3 per cent of the market. Aldi is aiming for 24 more store openings before Christmas.
The shift in supermarket sales, together with a new regime at the CMA, headed by former Amazon UK boss Doug Gurr, radically changes the dynamics for grocery.
Sainsbury’s advisers have been looking for a deal and geography – the strength of both Morrisons and Asda in the North – makes them obvious candidates.
Store disposals would be necessary, but not enough to jeopardise the economics.
> Sainsbury's held blockbuster merger talks with rival Morrisons
National wealth
Shadow Chancellor Andrew Griffith, speaking to the Tory faithful in Birmingham, offered alarming data about young professionals leaving the UK by the jumbo jet-load every day in response to Labour’s brutal taxes on enterprise.
Losing the most ambitious cohort is bad enough. Equally painful is data from the Bloomberg Billionaire Index showing that the super-rich, worth £120billion, have fled since Labour won office in July 2024.
Reversing a growing exodus of wealth creators is critical to restoring growth.