UPDATE: UK government orders competition probe into BT's TalkTalk deal

The UK government has instructed the Competition & Markets Authority to investigate the planned acquisition of TalkTalk Telecommunications Ltd and PlatformX Communications Ltd by BT Group PLC.

Under the public interest intervention notice, issued on Monday by Secretary of State for Digital, Culture, Media & Sport Lisa Nandy, the CMA must submit its findings by 1700 BST on October 19.

The competition regulator is consequently inviting comments from interested parties, "on any competition or public interest issues," until Friday.

BT had, earlier on Monday, announced a deal to buy TalkTalk and PlatformX out of administration.

TalkTalk sells home broadband and phone services in the UK, while PlatformX supplies other telecom providers with internet connectivity services. BT's Openreach is a network infrastructure supplier of TalkTalk.

BT said it had agreed the deal "in the public interest, to protect customers and critical national infrastructure," following an unsuccessful sale process for TalkTalk's consumer and wholesale operations.

The London-based telecommunications major said the total cash impact in financial 2027 arising from the deals will be around £400 million, comprising consideration, transaction and administration costs, working capital impacts as well as a trading loss for the balance of this financial year of £60 million and non-receipt of £100 million otherwise due to Openreach.

BT said it will provide further details on the effects of the acquisition on revenue, earnings and capital expenditure later this financial year.

BT said it remains committed to its credit rating target and to grow its dividend by a low to mid single-digit percentage per annum in financial 2027 and onwards until metrics consistent with a BBB+ credit rating are reached. Thereafter, residual cash flow will be available for enhanced distributions to shareholders.

During the last 12 months, TalkTalk reported revenues of £1.2 billion and was loss-making, but BT said over a period of time the acquisition will become value accretive as the business is stabilised and synergies are realised.

BT said Clive Selley will lead the stabilisation and integration planning of the acquisition. Martijn Blanken will take over Selley's role as chief executive of BT International, in addition to being CEO-designate of BT's proposed international joint venture with Verizon Communications Inc.

BT acknowledged in its announcement that it expected a regulatory review of the transaction to take place over the coming weeks, during which it and TalkTalk will continue to operate separately.

BT Chief Executive Allison Kirkby had met with UK Department for Digital, Culture, Media & Sport officials to gauge whether a possible bid for TalkTalk would lead to a lengthy competition watchdog probe, the Financial Times reported last week.

"Our immediate priority is to stabilise the business and provide a safety net for the households and businesses who rely on TalkTalk. Once the regulatory process has been concluded, TalkTalk's customers will benefit from access to the UK's best network," Kirkby said on Monday.

BT shares were up 1.7% at 199.60 pence late on Monday morning in London.

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