Virgin Media O2 is in early talks to buy TalkTalk in a deal that would bolster the broadband-to-streaming company’s challenge against BT’s dominance.
Bankers at LionTree work on behalf of Virgin Media O2 and owner Liberty Global overheard TalkTalk after owners hoisted a for sale sign over the company, sources said.
An acquisition would bring together Britain’s third-largest broadband providers, making Virgin Media O2 the UK’s second-largest internet company above Sky. It would also bolster the ambitions of the Liberty Global-owned company to take on BT, the UK’s largest supplier.
Such a sale could be the first of many deals in the telecom sector, with Vodafone, BT and Virgin Media O2 urging regulators to merge companies to achieve better returns.
If a deal closes, it would bring together TalkTalk’s 4.2 million customers with Virgin Media O2’s 47 million for mobile, broadband and cable TV.
The prospect of a much bigger challenger plunged shares in BT in afternoon trading by more than 5 percent to 176p.