Tesco sells Blinkbox and broadband service to TalkTalk

The deal is thought to be worth £5m

TalkTalk chief executive Dido Harding (Rex )

Tesco has announced today that it is selling its online video service Blinkbox to TalkTalk, along with its broadband business – as the supermarket chain reported further sales falls.

In a deal understood to be worth £5 million, the telecom group has acquired the movie business free of debt and as a single transaction for cash.

Blinkbox chief executive and co-founder Adrian Letts will join the company as managing director of TalkTalk TV. The integration of the new acquisition with the company’s existing TV business, which has over 1.2 million customers, is expected to begin immediately.

TalkTalk chief executive Dido Harding said: “Since launch TalkTalk TV has demonstrated its popularity with value-seeking customers to become the UK’s fastest growing TV service. We are excited about the opportunity that Blinkbox’s platform and technology expertise bring, and which will significantly accelerate the development of our TV platform.

"The purchase of Tesco’s broadband base is another example of TalkTalk leveraging its national network to grow faster. We are excited about the future of quad-play – fixed phone and broadband, TV and mobile – and this acquisition will help to further drive home our value for money advantage."

The announcement came as Tesco chief executive Dave Lewis laid out a series of cost-cutting plans – despite better-than-expected Christmas sales.

Like-for-like sales were down just 0.5 per cent over the festive period, compared to a 4.4 per cent fall in the previous three months.

But Tesco is nevertheless set to close 43 stores across the UK and also plans to slash capital spending to £1 billion for the next financial year.