Virgin Media takes aim at ‘stitch up’ BT rescue of Talktalk

Virgin Media has criticized BT's acquisition of Talktalk as a "stitch up," alleging it could further consolidate Talktalk's dominance in Britain's broadband sector. BT recently agreed to purchase debt-ridden Talktalk and its wholesale arm, PlatformX Communications, out of bankruptcy proceedings, securing services for 1.5 million retail customers and one million wholesale users.

The transaction is projected to cost BT approximately £400 million. However, Virgin Media questioned the rationale behind permitting BT to acquire a significant rival just days after regulators expressed reservations about Nexfibre's intended acquisition of Netomnia. Virgin Media's spokesperson stated that the situation appeared to be a "stitch up" masked as a rescue deal in the public interest, suggesting that competition rules may be undermined to allow BT to dominate the market more effectively.

The spokesperson emphasized that the company believes rules should not be disregarded to allow Talktalk to fall into BT's control without proper process, and vowed to raise concerns directly with the government and regulators. The Competition and Markets Authority (CMA) had recently expressed concerns that Nexfibre's planned acquisition of Netomnia could weaken competition in the wholesale broadband market.

Nexfibre argued that the merger would create a financially viable competitor to BT's Openreach and expedite fiber deployment. The CMA's investigation into BT's acquisition of Talktalk will be subject to oversight by Culture Secretary Lisa Nandy, who will consider broader public concerns following the CMA's report, with a deadline of October 19.

Kester Mann, director at CCS Insight, acknowledged the takeover as a response to an "unprecedented situation," with potential threats to continuity of service for Talktalk's 2.5 million customers. However, Mann also noted that the deal would likely draw scrutiny from regulators committed to maintaining a fair and competitive market.

BT's CEO, Allison Kirkby, stated that the acquisition was the "only viable option" to maintain Talktalk's connectivity amidst the provider's severe financial distress. For customers, there are no immediate changes expected.