TalkTalk launches £200m share placing ahead of full fibre roll out for UK
Warrington-based telecoms company TalkTalk is bidding to raise £200m with a share placing as it prepares to invest £500m in a deal to provide full fibre roll out across the UK.
TalkTalk is in discussions with Infracapital, the infrastructure equity investment arm of M&G Prudential, for the creation of an independent company.
Infracapital will provide 80% of the funding and TalkTalk 20%.
The agreement – the heads of terms of which are subject to contract – will see TalkTalk use cash from the placing and private equity funds to invest of up to £500m, enabling a total investment of about £1.5bn, to provide full fibre to more than three million homes and businesses in mid-sized towns and cities.
TalkTalk will be a founding wholesale customer of the new company, providing a minimum volume commitment, building on a successful trial in York, where its network currently reaches 14,000 homes and is in the process of being extended to 54,000.
Executive chairman Charles Dunstone and other directors are meanwhile participating in the placing and intending to contribute up to £40m.
Net proceeds will be used to strengthen the group’s balance sheet, support continued customer growth and invest in long-term FTTP (fibre to the property) plans.
Dunstone said: “”It’s 12 months since I announced my intention to take a more active role in the management of TalkTalk. Since then, we have reset the business and returned it to quarter-on-quarter customer growth.
“By signing heads of terms with Infracapital we are making good progress towards putting TalkTalk at the heart of Britain’s fibre future by building a full fibre network, bringing faster, more reliable internet to millions of homes and businesses.
“Looking ahead, we see real opportunity to continue growing the core business whilst also investing in full fibre. We have therefore strengthened our balance sheet and temporarily reduced our dividend to take full advantage of the opportunities available.
“We anticipate revenue growth and strong earnings growth in the year ahead, as the benefits of a growing customer base and rigorous cost control begin to deliver the results this business is capable of.”
Barclays Bank, acting through its investment bank and Deutsche Bank AG, London Branch are acting as joint global co-ordinators and joint bookrunners in connection with the placing.
