TalkTalk CEO steps back as three-way separation confirmed

Tristia Harrison’s almost seven-year tenure as chief executive of TalkTalk Group is coming to an end as the company splits into three standalone businesses.

Wednesday’s announcement from the UK telco quietens – almost – all the recent rumours surrounding its future. There have been rumblings about a split for some time, with talk of such a move intensifying in the UK press in recent days.

TalkTalk confirmed that it is going ahead with a legal separation, so, as of next March, it will become three entities: its B2B Wholesale Platform; TalkTalk Consumer; and TalkTalk Business Direct. The companies will become operationally separate from 1 November.

TalkTalk’s current wholesale leader Tom O’Hagan will become CEO of the Wholesale Platform; current MD of TalkTalk Consumer and Supply & Partnerships, will be CEO of TalkTalk Consumer; and Ruth Kennedy will remain in her position as Managing Director of TalkTalk Business Direct.

Harrison will chair a newly-established Oversight Board that will, as its name suggests, supervise the new businesses through to the point of legal separation on 1 March. At that point, she will take on a non-executive director role at the B2B Wholesale platform.

Harrison officially took on the top job at TalkTalk in May 2017, replacing Dido Harding, who also served a seven-year term at the helm. Harding managed numerous developments at TalkTalk, having been named its first CEO after it became a publicly-listed company in 2010, but she will be best remembered for the 2015 cyberattack that dented the firm’s credibility as well as its wallet.

Harrison’s period in charge has been peppered with endless M&A rumours, including a widely-reported merger attempt with Virgin Media O2 last autumn and alleged approaches from Vodafone and Sky earlier in the year. Most recently, speculation has narrowed on to TalkTalk Business Direct, which is purportedly on the block and has attracted interest from Daisy Group and Sky.

So while TalkTalk has clarified its plans and its new structure, there remains a big question mark over what will happen to the three businesses once they become standalone entities.

It’s highly likely that a sale of TalkTalk Business Direct is on the cards for the near future; indeed, the timing of the legal separation announcement could well be linked to such a move. And we certainly can’t rule out deals for the other two.

TalkTalk was keen to talk up both in its announcement, referring to the B2B Wholesale Platform as “the leading and fastest growing provider of wholesale telecom services in the UK,” and highlighting TalkTalk Consumer’s 2.4 million residential broadband customers and its status as “the only scale value player in the residential broadband market.” While self-aggrandising language is hardly unusual in a press release, there does seem to be a touch of shop windowing about it.

For now though, it’s all about setting up those three businesses, irrespective of whether there are sale plans. The move will mean “a limited number of redundancies,” TalkTalk said, noting that these will primarily involve central corporate functions.

Given that the business units already exist, the separation is unlikely to involve too much upheaval. The next step or steps may well be a different matter though.

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