BT asked for payment waiver as TalkTalk rescue negotiations intensify

The private equity firm which wants to buy the wholesale arm of struggling TalkTalk Telecom Group has approached BT Group to seek relief from payments worth over £100m in order to push a rescue deal through.

Sky News has learnt that Epiris has asked the FTSE-100 telecoms giant to waive or write off several months of payments from TalkTalk's PXC division to BT's arms-length subsidiary, Openreach.

PXC typically pays between £60m and £80m every month to Openreach, making it by far TalkTalk's biggest supplier.

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Industry sources said the request, which has emerged with TalkTalk on the brink of an administration process, raised questions about the broadband supplier's fate if BT does not agree to it.

One telecoms executive not directly involved in the situation said it could pave the way for BT to stage a rescue of TalkTalk itself, despite the competition obstacles which would otherwise appear to stand in the way of such a deal.

Epiris, which is in the midst of a takeover bid for London-listed Gamma Communications, could walk away from the talks if the payment waiver request is rejected by BT.

Both the sale of PXC to Epiris and that of TalkTalk's consumer arm to Ares Management, the group's biggest lender, would be implemented by way of a pre-pack administration, which enables businesses to be sold shorn of some of their financial liabilities.

If an orderly pre-pack - which would be overseen by insolvency practitioners at Alvarez & Marsal - cannot take place, TalkTalk is likely to collapse by the start of next week.

Sources said that urgent discussions would continue on Thursday in the hope of agreeing a resolution.

Ofcom and Whitehall are both being kept informed about the talks.

PXC serves thousands of vulnerable customers as well as hospitals, doctors' surgeries and other areas of critical national infrastructure.

If Ares does take control of the retail arm, which has about 1.7 million customers, it would not do so by making a significant cash payment, according to people close to the process.

Sky News revealed earlier this month that Ares was lining up a deal for the consumer business with TalkTalk's founder, Sir Charles Dunstone, expected to become chairman but not hold an equity stake.

Opus Broadband, which made a revised, cut-price offer of about £100m for the division last week, has confirmed its interest in a deal but is now a less likely buyer than Ares.

Industry sources said this week that Vodafone, which had previously been linked with a bid for TalkTalk's retail operation, had also made contact with TalkTalk's advisers in the last few days, although it was unclear how serious its interest was.

Epiris stepped back in to buy PXC last week after the termination of exclusive talks between TalkTalk and Octopus Investments.

In a statement last Friday, TalkTalk confirmed it was in advanced negotiations about the disposals.

"The company is now in the final stages of its sales process for the businesses and expects to conclude both transactions imminently," it said.

Sir Charles launched TalkTalk in 2004 with an audacious attempt to capture a big share of Britain's retail telecoms market.

The Carphone Warehouse co-founder remains a significant shareholder in TalkTalk alongside Toscafund Asset Management, with which he took it private in 2021.

The company was floated on the London Stock Exchange in 2010, when it demerged from Carphone Warehouse.

Its 2021 delisting took place at a valuation of about £2bn including debt.

The company has struggled for long periods since then, with cashflow difficulties - exacerbated by a haemorrhaging of its retail customer base - meaning the group's valuation has shrunk significantly over the last five years.

Over the last 18 months, its stakeholders, led by Ares, have stepped in repeatedly with new financial support to help stabilise the company.

Ares spearheaded a deal to inject a further £115m into the business, which is heavily debt-laden, as recently as February.

TalkTalk, BT and Epiris all declined to comment.

(c) Sky News 2026: BT asked for payment waiver as TalkTalk rescue negotiations intensify