Proactive Investors - Virgin Media O2 (VMO2) has reignited discussions for a potential acquisition of TalkTalk's consumer division, according to a Telegraph report.
The move marks a renewed interest after a previously contemplated £3bn deal, including debt, was shelved two years ago due to market and regulatory uncertainties,
TalkTalk is considering divesting its consumer segment as part of a broader restructuring to manage a pressing need to refinance its debts.
TalkTalk consumer division has around 2.4 million residential users, recently expanded by the acquisition of half a million Shell PLC (LON:SHEL) customers from Octopus Energy (LON:ORIT).
This potential acquisition by VMO2 aims to bolster its retail customer base and enhance its footprint in the market's value segment.
A key component of the deal could be a wholesale agreement with TalkTalk, with VMO2 planning a transition of these customers to its full-fibre network eventually.
However, the talks are reportedly in their infancy, and there's no assurance that an agreement will be reached.
Financial strain has led TalkTalk to initiate a breakup of its operations, having already divested its business division for £95 million to a vehicle controlled by its primary investors.
Furthermore, the company is exploring the sale of a stake in its wholesale operations to US-based DigitalBridge, alongside plans to separate the consumer division post-refinancing.
TalkTalk reported a loss of 100,000 retail customers in the first quarter of 2023 as it curtailed its sales and marketing expenditure by 40%.
The company has also sought to extend credit terms with suppliers to up to 300 days in an effort to bolster its liquidity.