The Daily Telegraph
yesterday (Sat 14 Nov) finally takes note of the burgeoning debt pile at TalkTalk
. Debt which has risen a further £32m since last week. With TalkTalk
funding its unexpectedly generous interim dividend by borrowing even more.
That borrowing, now totalling £631m, is likely the weak point which could determine the future for TalkTalk
. Determining whether it will recover and go forward as an independent company, or perhaps be absorbed for pennies on the pound in a hostile takeover by an industry rival. From The Telegraph
TalkTalk’s debt pile now stands at £631m, a level that prompted unanswered questions from analysts over the covenants on its borrowings. The company said it expects the total to come down by the end of the year; most in the City disagreed.
We don't know the terms of issuance of its £109m of corporate bonds, nor its £560m rolling credit facility, nor its £100m overdraft. We don't even know the identities of those creditors.
It's possibly that a group of creditors has decided to turn the thumbscrews on Dunstone, Ross and others. To ease them out of their equity stakes in the company. This hacking brouhaha being simply the leverage to do that.
Interestingly, we also learn that earlier this year, Dunstone was receptive to a buyout at 400p a share, but such a buyer was not forthcoming. This from an anonymous (maybe fictitious) "senior telecoms industry rival":
Amid the rapid consolidation of the telecoms industry this year, the shares climbed beyond 400p amid rumours it could be snapped up.
A senior telecoms industry rival said: “Charles [Dunstone] was saying he wanted a strategic buyer at a time when strategic buyers are paying premiums. But what you would be buying with TalkTalk is basically a load of customers that are more prone to churning and not much else.
Crude, bearish and unsubstantiated talk intended only to damage TalkTalk
further. You normally do that for one reason; to acquire an asset for much less than it is worth. Like Arfur Daley
, the used car dealer, this is the corporate equivalent of tyre-kicking and much sucking through teeth. A smear to drive down the acquisition cost to a firesale price.
What's insightful in the latest round of damning news reports on TalkTalk
is the general tone in which they are written. Almost spelling out impending doom. Going through the history of the company from 2006 conception, demerger from Carphone Warehouse
, and lately the hacking crisis. And, ultimately, the end... News reports which feel like the obituaries editor penned them! The fate of the company sealed already?
A glimmer of light for the beleaguered company coming from John "Fingers" Fingleton, the former head of the Office of Fair Trading
. Fingleton is now a paid advisor to TalkTalk
. His voice adding weight to industry pleas for the liberation of Openreach
clutches. Calling for a major redefining of the sector. A move which could hugely stimulate competition; securing the future of TalkTalk
John Fingleton, who led the Office of Fair Trading between 2005 and 2012, said that fixed-line communications constituted one of Britain’s “worst bottlenecks”.
“A really easy solution for everybody would be what happened in New Zealand — for BT to wake up and work out that it’s in everyone’s best interests for it to [separate its fixed-line network] voluntarily,” he told a conference, sponsored by one of BT’s main rivals, Sky.
BT should voluntarily spin off its fixed-line telephone and broadband network Openreach in order to avoid a protracted regulatory battle, the former head of Britain’s competition regulator has said.
Edited by edwincluck (Sun 15-Nov-15 18:39:42)