Virgin Media O2 (VMO2) is reportedly engaged in talks to buy the consumer division of internet provider TalkTalk after a larger deal for the whole firm failed two years ago.
Discussions are still in their early stages, with no guarantee of a final agreement, The Telegraph reported.
Specifics of the deal for TalkTalk’s consumer division, which serves around 2.4m residential customers, remain unclear.
Plans for a full £3bn sale of TalkTalk to VMO2 were thwarted in late 2022 after months of talks due to market and regulatory uncertainties.
But renewed talks have now begun as TalkTalk restructures ahead of a significant debt refinancing this year, where it will face a substantial increase in borrowing costs.
TalkTalk, which is struggling with a £1.1bn debt burden, plans to split into three standalone companies in March. The three units will be focused on business-to-business wholesale telecoms services, consumer broadband and small businesses.
For telecoms company VMO2, the acquisition presents an opportunity to expand its retail customer base and strengthen its position at the cheaper end of the market.
Telecoms mogul Sir Charles Dunstone launched TalkTalk as a subsidiary of Carphone Warehouse in 2003, and later split off in 2010.
VMO2 declined to comment on the report while TalkTalk did not immediately respond to a request for comment.