TalkTalk, Sky and Shell Bidding for Post Office's Broadband Business

TalkTalk, Sky and Shell Energy’s home energy and broadband division are reportedly in the running to acquire Post Office’s telecoms business.

Post Office indicated last summer that it was interested in selling the division, which has more than 500,000 broadband and landline phone customers.

Bids from TalkTalk and Sky, two of the country’s largest broadband providers, were expected. But Shell is a surprise contender, and winning Post Office’s broadband accounts could make it a larger player in UK telecoms.

The FTSE 100-listed oil and gas giant entered the UK broadband market in 2018 after acquiring energy supplier First Utility. It took control of First Utility’s 700,000 energy accounts but also its fledging broadband business. Since then Shell grown the business to 870,000 energy customers, supplied with renewable electricity, and 130,000 broadband accounts and rebranded both as Shell.

Meanwhile, fellow bidder TalkTalk, which holds a 9% share of the broadband market, is in the process of agreeing a £1.1 billion takeover by its largest shareholder, Toscafund Asset Management. The takeover is unlikely to have factored in a potential acquisition of accounts from Post Office. But TalkTalk has an existing relationship with Post Office, through a managed service agreement with TalkTalk Wholesale, which may help it pull ahead.

A winning bid by Sky would do little to change the telecoms landscape, as Sky already holds 24% of the broadband market.

Sources close to the negotiation said that Post Office CEO Nick Read won’t part with the broadband division unless he receives an attractive offer. The division is estimated to be worth more than £100 million.

It’s unknown if any winning bidder would retain one of the most attractive features of Post Office broadband deals, especially for older internet users: the ability to pay bills at Post Office counters.

Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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