Ovo Energy sues Talktalk over failed broadband customer deal

The claim centres on a 2022 deal in which Ovo sold a telecoms business, originally acquired through its takeover of SSE Energy Services, to Talktalk

Ovo Energy has launched legal proceedings against Talktalk over a dispute arising from a failed broadband customer transfer, heaping further pressure on both firms as they grapple with their respective financial difficulties.

The claim revolves around a 2022 agreement in which Bristol-headquartered Ovo offloaded a telecoms business, originally obtained through its acquisition of SSE Energy Services, to Talktalk, transferring approximately 135,000 broadband customers in the process.

Under the terms of the deal, Talktalk made an upfront payment and pledged additional sums contingent on performance targets being met.

Yet the arrangement fell apart after significant numbers of customers abandoned the service, eroding the overall value of the transaction.

TalkTalk has since withheld the outstanding payment, compelling Ovo to take the matter to court, as reported by City AM.

The legal action arrives at a particularly delicate time for Ovo, which is looking to bolster its finances through a £300m fundraising effort while also exploring a potential sale of the business.

The energy supplier, which counts around four million customers on its books, has faced growing scrutiny since falling short of tougher financial resilience standards introduced by regulator Ofgem in the wake of the 2022 energy crisis.

Investment bankers at Rothschild have been brought in to oversee the process, with options on the table including fresh investment or an outright sale of the core business.

Ovo has also undertaken a cost-cutting programme designed to save tens of millions of pounds. The firm posted losses of £135m in 2024, yet paid £27m in the same year to a company owned by founder Stephen Fitzpatrick, tied to a longstanding brand licensing arrangement that was subsequently bought out in a £150m deal.

The broadband group is also contending with approximately £1.4bn of debt, mounting interest costs and persistent losses, which have compelled it to rely on repeated emergency funding from shareholders, including executive chairman Charles Dunstone.

In November 2025, Talktalk Group announced it would embark on a formal process to explore new ownership structures following the separation of its consumer and PXC businesses from the wider group.

The company has brought in PJT Partners to advise on strategic options, with talks continuing and potential outcomes ranging from an outright sale of the group to the disposal of individual divisions.