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(Sharecast News) - BT Group is exploring a possible acquisition of TalkTalk, it emerged on Wednesday morning, as the struggling broadband provider battled mounting financial difficulties and a sharp loss of customers.
According to the Telegraph, citing unnamed City sources, TalkTalk - which serves 3.2 million broadband users - had come under renewed pressure in recent months as rising debts and a customer exodus strained its operations.
The company, led by founder Sir Charles Dunstone, narrowly avoided insolvency last year after a 235m shareholder bailout.
However, with 1.2bn in debt and a further deterioration in customer numbers, TalkTalk was again facing uncertainty.
Market data showed that one of TalkTalk's bonds was trading at 44p in the pound, down from 78p in April, reflecting doubts over its ability to repay lenders.
The provider lost 400,000 customers in 2023 and ranked lowest in Ofcom's recent customer satisfaction survey.
The decline was also affecting BT's Openreach division, which hosts most of TalkTalk's connections.
Openreach lost nearly 250,000 broadband lines in the first quarter of 2025, partly due to TalkTalk's downturn and customer migration to fibre-only challenger networks.
TalkTalk had reportedly delayed payments to Openreach, prompting the network operator to threaten restrictions on new customer additions.
BT was now apparently considering whether acquiring TalkTalk could stabilise its network business and bolster its value broadband offering through its Plusnet brand.
A deal would give BT an estimated 36% share of the broadband market, but would likely face regulatory scrutiny over competition concerns.
The Competition and Markets Authority would be expected to review any deal closely, with analysts warning that a protracted investigation could further erode TalkTalk's value.
Ofcom was said to be monitoring the situation amid fears that a collapse could leave millions without service.
TalkTalk had been restructuring since 2023, splitting into three divisions and cutting costs through job reductions and asset sales.
While the efforts were designed to save 120 million, they had also deepened concerns over service quality and customer retention.
Both BT and TalkTalk declined to comment on the reports.
At 0856 BST, shares in BT Group were up 1.73% at 179.34p.
Reporting by Josh White for Sharecast.com.