The meteoric rise that the mobile phone and related telecommunications industry experienced during the nineties was the midwife to many companies, many of these that today sit atop some of the richest company in the world tables. Thirty years ago, many of us had never heard of the huge telecommunications giants that are so every-day today, with companies such as Vodafone, O2 and the Carphone Warehouse now household names.
In an attempt to diversify their business, The Carphone Warehouse acquired the telecommunications company Opal Telecom in November 2002. This business move gave The Carphone Warehouse access to a switching network, which in turn gave access to BT Wholesale's land line telephone systems for the very first time.
Sensing an opportunity, the co-creator of Carphone Warehouse Charles Dunstone became CEO of TalkTalk, a new company offering cheaper land line calls than their competitor British Telecom. They went on to offer unlimited free calls between TalkTalk users from April 2004.
The company had a lot of success, and soon diversified its own business by moving into offering broadband services to their land line phone customers too. This was then followed by a succession of takeovers by other services by TalkTalk, including an acquisition of E2Save for £4.7m, another acquisition of Xtra in Spain for £11.6m as well as taking over One Stop Phone Shop for £15m and the double swoop of Tele2 for £11.5m and One.Tel for £169.6m.
This rapid expansion allowed them to introduce their controversial "free broadband plan" in which free broadband was offered to their customers. However, demand severely outstripped supply and TalkTalk experienced a rocky period where other allegations were thrown at them, such as the telephone slamming issue and the scandal surrounding their "data pimping" relationship with former spyware company Phorm.
Despite many teething problems and numerous complaints being made against the TalkTalk service, the company never stood still, and continued its relentless acquisition of other companies in October 2006 by acquiring AOL UK for a cool £370m. As of 2008, TalkTalk was sat in third place in the pecking order of telecommunications providers in Britain, behind both BT and Virgin Media, with around £347m in revenue.
However this is all set to change, as in May of this year TalkTalk agreed to buy their rival broadband provider Tiscali's customer base for £236m, which would put them into second place. This deal though is subject to European Union approval, and by 2010 the people in control of both Carphone Warehouse and TalkTalk hope to have the two companies existing as separate listed entities, in order that shareholders can see better how their own companies are faring.
All in all, it would seem that TalkTalk endured a turbulent 'teenage' phase that they seem to be coming out of. With this most recent acquisition, which would take their customer base close to the 5m mark, it would seem that TalkTalk is determined to become a big player in both British and global telecommunications, and by offering cheap broadband and phone calls they could certainly accomplish this.
