TalkTalk debt deadlines loom and faces collapse if deal isn’t done

The directors and owners of Salford Quays headquartered telecoms business TalkTalk are under pressure to secure a £200m funding deal in the next month.

The broadband and telecommunications provider, which has 3.6m UK domestic and business customers, is about to file a warning in its annual report of “a material uncertainty” on its ability to continue as a going concern if a deal isn’t done. 

A short term deal with founder Sir Charles Dunstone sinking further funds into the company will run alongside ongoing discussions with debt providers. 

The business faces repayment deadlines on its existing debt facilities which it may breach as soon as August, which could tip TalkTalk into insolvency.

However, chief financial officer James Smith, who presented to bond holders last week, said he was hopeful of a deal and hinted at a new investor emerging: “We anticipate agreement on new capital investment into the business in the near future, and discussions to achieve that are ongoing.

“Engagement continues with a potential new investor, together with potential new lenders,” he said.

Smith added: “At the same time, the Group’s existing shareholders have confirmed their intent to provide new funding of over £200m into the Group to support working capital and operational costs. 

“Those shareholders and the company are in dialogue with existing Group lenders, or their advisers, regarding the optimal route to put that funding into the business.”

Reports over the weekend suggested Dunstone was in talks with shareholders, led by private equity firm Toscafund, to keep the business going, but that that would only kick the problem down the road as it faces a £685m bond repayment deadline in February 2025.

In February 2024 TheBusinessDesk.com reported that it was close to a £450m investment deal with Australian banking group, Macquarie which was keen to take a stake of at least 40% in the wholesale arm of the broadband provider.

The rest of TalkTalk has been undergoing a break-up after TalkTalk Business Direct (TTBD), the business and enterprise-focused connectivity provider, was acquired last October 2023 by shareholders, including Dunstone, for a reported £95m acquisition.

The sale was the first phase of a demerger strategy to create three separate businesses.

TalkTalk’s consumer arm is expected to be sold at a later date.

TalkTalk have been approached for comment and this story will be updated.