TalkTalk Business still wrongly gets “lumped into” the wider group, its CEO conceded as she opened up on its M&A plans following its demerger from TalkTalk.
The connectivity specialist completed its split from the mothership in February, before announcing its acquisition of £16m-revenue IT MSP Planet IT in March.
Talking to IT Channel Oxygen, CEO Ruth Kennedy confirmed further IT acquisitions are on the cards as the Manchester-based outfit looks to reinvent itself as a managed network services provider focused on the SME and enterprise space.
Currently, around half of its £80m annual revenues are generated by SOHO broadband customers, she said.
“We can’t be good at everything, and that’s why we wanted to divert our attention over to more the SME, large enterprise and public sector,” she said.
“In the past, we’ve looked at our competitors as very much being BT, Virgin and Gamma – and they are still our competitors. But we’re moving into a different market where Focus Group, O2 Daisy and Wavenet are more who we compete with.
“One reason is that our product set is changing. But secondly, while we’re still an exclusive provider and we use the same network, we’re not a tier one anymore – we’re a reseller of PXC’s network.”
“We get lumped back into the wider group”
Having officially parted ways with TalkTalk in February, TalkTalk Business is set to put even more clear water between itself and the group when it moves into a new Manchester office in the next three to four weeks, Kennedy indicated.
But not everyone has got the message, she conceded.
“We’re trying to be really clear on the separation,” she said.
“People don’t always understand the separation’s happened, and we sometimes get lumped back into the wider group – which is obviously not the case.”
Planet IT just “the first step in our journey”
TalkTalk Business spoke to “fewer than five” IT MSPs before settling on Oxfordshire-based Microsoft and Sophos partner Planet IT as its maiden conquest.
“We always knew when we separated in October 2023 that M&A was part of the strategy. We looked at it from product, scale and capability, and Planet IT was definitely the right acquisition for us,” Kennedy said.
“It’s a lovely little business. [Planet IT co-founders] Gavin and Sean were childhood friends and it’s a wonderful story.”
Further acquisitions in the IT space are likely once Planet IT has been integrated, Kennedy indicated.
“This is just the first step in our journey,” she said.
“We’re not in an active process to acquire another company at this moment in time, but once we’ve integrated Planet we’ll start looking at what else we need to be able to support – because there’s a huge amount to do.
“When we separated, we only had a two-year TSA [transitional service agreement], so the emphasis was on the separation – and we used outsourced partners to support that strategy. We want to bring that in-house as much as possible, and that’s where the acquisitions will be focused.”
Boasting 184 employees, TalkTalk Business has 75,000 customers, most of which are SOHOs, Kennedy indicated.
The company is not abandoning its SOHO heritage, Kennedy stressed, however.
“About 50% of our revenues are from SOHO, but from a margin perspective, I’d say 80% is from SME upwards,” she said.
“And then when we looked at our cost to serve on these SOHO customers, and how much marketing spend is required, it’s disjointed.
“We would never exit that market. We will save and protect these customers in the churn, but we will divert our spend away to different segments now.”
Doug Woodburn is editor of IT Channel Oxygen
