London — Britain’s largest telecommunications provider, BT Group, has agreed to acquire TalkTalk’s consumer and wholesale operations after the broadband company was unable to secure a buyer.
BT said Monday that it would pay about £400 million ($528.40 million) for the businesses. The deal is designed to protect services used by 2.5 million customers and avoid a possible disruption to broadband connections.
TalkTalk had been seeking a buyer after experiencing financial difficulties. An extended sales process failed to produce an agreement covering the entire company before BT stepped in with its offer.
The British government moved on Monday to speed up the regulatory review, citing concerns over the potential consequences if TalkTalk were to fail.
Culture minister Lisa Nandy issued a Public Interest Intervention Notice, enabling public-interest concerns to be considered alongside competition matters during the regulatory process.
The government said TalkTalk’s networks support communications infrastructure used by emergency services, hospitals, ambulance services and medical alarm systems. As a result, the company’s potential collapse raised concerns extending beyond its financial difficulties.
The Competition and Markets Authority is expected to examine competition issues and report to Nandy by October 19. The culture minister will then assess broader public-interest concerns.
While the review is underway, BT and TalkTalk are expected to remain separate businesses and continue competing against each other.
The acquisition is also expected to attract scrutiny because BT already operates several major consumer telecommunications brands, including BT, EE and Plusnet, while its Openreach division runs Britain’s largest fixed-line network.
TalkTalk has a longstanding wholesale relationship with Openreach and is one of the network operator’s largest customers. It depends on Openreach infrastructure to deliver fixed-line and fibre services to households and businesses throughout the UK.
BT Chief Executive Allison Kirkby said the acquisition was the only viable option for keeping millions of TalkTalk customers connected and supported.
The deal highlights the pressure telecommunications companies can face when financial problems threaten businesses whose services depend on infrastructure and serve large numbers of consumers.
For TalkTalk customers, maintaining uninterrupted service is the immediate priority. Regulators, meanwhile, will have to consider whether BT’s acquisition can proceed while preserving competition in Britain’s broadband market.
The government intervention means the transaction will be assessed not only for its impact on competition but also for its possible effects on essential communications services.
BT’s agreement consequently represents both a corporate acquisition and an effort to address the risk that TalkTalk’s financial difficulties could have disrupted services for millions of customers and affected critical communications systems.
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