Daisy Group is set to acquire TalkTalk's direct B2B operation for £175 million, as the telecom giants wants to shift its focus to its core B2B markets; partner and wholesale components.
With the acquisition, Daisy would take on TalkTalk's 80,000 business customers, which have proved to be a significant burden for the loss-making division. TalkTalk's operating profit has more than halved from £224 million to £91 million in the last 12 months and although TalkTalk's B2B custom only accounts for around 20% of revenues, it will ensure TalkTalk can focus on its profitable indirect and wholesale divisions.
“When we reset TalkTalk a year ago, we said we would focus on delivering sustained customer growth whilst radically simplifying the business," Tristia Harrison, chief executive of TalkTalk, said. "One year into the strategy, we are making good progress on both. Our customer base grew by 192,000 in FY18, underpinned by our unique propositions and our lowest ever churn.
"We have also made real progress in simplifying the business to focus on core, fixed connectivity. This will continue into FY19 with the sale of our direct B2B business, as we focus on cementing our position as the market leader in our core B2B markets, partner and wholesale, which represent over 80% of our B2B business and continues to grow strongly."
The purchase has come as a bit of a surprise to the industry, as the dust has hardly settled on rumours that Daisy Group is setting itself up for a sale of its own. However, Daisy seemingly wants to offload its reseller business, instead focusing on direct sales, which makes sense considering this purchase. The company has apparently been in talks with a number of suitors, with CVC and Providence Equity Partners said to be interested in the division.
Daisy's acquisition of TalkTalk's direct B2B business is due to complete by the end of July, although it's not clear when TalkTalk's customers will make the move across.
IT Pro has contacted Daisy Group for comment.
