TalkTalk’s largest creditor, Ares Management, is demanding a payment of £100 million from BT Group as a condition for approving a takeover of the struggling broadband provider. The demand comes amid ongoing negotiations over a proposed fast-track insolvency acquisition of TalkTalk, which has been saddled with approximately £1.5 billion in debt.

Ares Management, based in Los Angeles, has been the principal lender to TalkTalk, providing over £380 million in funding since August 2024. The firm had previously supported a restructuring plan that would divide TalkTalk’s assets, with its consumer division set to be acquired by Ares itself, while its wholesale network unit, PXC, was expected to be sold to Epiris, a British private equity firm.

However, BT recently entered the fray, challenging this arrangement by seeking government assurances to facilitate a full takeover of TalkTalk. BT’s bid has raised competition concerns due to the potential creation of a dominant supplier in the UK broadband market. The company approached the government last week to obtain regulatory support for the proposed acquisition.

Government officials appear inclined to approve the deal, partly motivated by fears that TalkTalk’s collapse could disrupt critical services for vulnerable customers, including elderly and disabled individuals relying on at-home emergency alert devices. Over the weekend, BT engaged in talks with Ares, initially offering a payment in the low tens of millions of pounds before raising the offer, which Ares rejected. Negotiations remain ongoing between the creditor and the FTSE 100 company.

Separately, Ares has communicated with government ministers and Ofcom, the UK’s media and communications regulator, alleging that BT has repeatedly threatened to cut off services to TalkTalk customers over the past two years, which could jeopardize access to essential services for vulnerable users.

The proposed deal with BT is expected to be structured as a pre-pack administration, a process that would likely result in significant write-downs for Ares and other creditors. Talks have been complicated by ongoing negotiations between TalkTalk and Openreach, BT’s infrastructure arm and largest supplier, further adding to uncertainties around the transaction.

Meanwhile, Virgin Media O2 (VMO2), the second-largest broadband provider in the UK, has expressed "serious concerns" about potential regulatory relaxations that could favor BT’s takeover of TalkTalk. This unease follows the Competition and Markets Authority’s provisional blocking of VMO2’s parent company’s acquisition of the Netomia fibre network, highlighting growing tensions around market competition.

The UK Department of Culture, Media, and Sport declined to comment on the matter, describing it as a commercial issue. BT, TalkTalk, VMO2, and Ares Management also declined to provide comment.