Next week’s official separation of the Carphone Warehouse consumer electronics business and TalkTalk broadband is expected to attract much interest from investors with TalkTalk broadband already been mentioned as a potential takeover target. The Carphone Warehouse operation is currently valued at £1.7 billion although after the demerger of the Carphone Warehouse retail operation the TalkTalk telecom business, the broadband service provider, will be valued at around £1 billion with the balance of the “old” Carphone Warehouse operation valued at around £700 million.
There is already talk that BSkyB and other UK broadband providers have been running the rule over TalkTalk broadband, which has expanded rapidly over the last few years through acquisition. It will be interesting to see how TalkTalk shares perform on Monday, when the split becomes formal, and whether we see any stake building in the early days. While there is no doubt that TalkTalk broadband has a significant presence in the UK market place, there is concern that advances in technology could leave the company exposed and potentially stretch finances to the limit.
Whether or not TalkTalk broadband would be stronger and more secure as part of a larger operation remains to be seen but there is no doubt that the massive growth in the size of the business has been one of the major success stories in the UK broadband sector over the last few years.