TalkTalk Business and UK technology services biz ARO plan to merge, creating what they say will be one of the country's largest communications and managed services providers.

The pair claim the combined organization will be "uniquely positioned" to serve as a single technology partner for British firms pursuing digital transformation. It will have annual revenue of about £200 million ($270 million) and a combined customer base of more than 70,000 companies.

Analyst firm Megabuyte noted that ARO, formerly known as Arrow, is the larger of the two businesses by earnings.

However, the vast majority of the combined customer base will comprise TalkTalk Business's small-business clients, with the remainder mainly ARO enterprise customers. Megabuyte expects fixed-line and mobile communications and connectivity to generate most of the combined revenue – about £130 million ($176 million) – with IT and cybersecurity services providing the remainder.

Megabuyte said the immediate priority would be integrating the businesses and finding opportunities to sell their services across the combined customer base.

"One can see why the deal is being sold in terms of cross-sell, with relatively little overlap in terms of customers and products. TalkTalk Business has a large base of small business customers who should be receptive to ARO's mobile and Microsoft offerings, as well as other IT and cyber services," says chief analyst Philip Carse.

TalkTalk Business completed its separation from the wider TalkTalk Group earlier this year as it sought to expand as an independent managed network provider. It recently acquired Planet IT, a service desk biz selling IT support and professional services.

ARO provides cloud, cybersecurity, and datacenter services and is a Microsoft Solutions Partner.

The two firms describe their operations as highly complementary.

The deal remains subject to approval under the UK's National Security and Investment Act (NSIA), apparently because ARO supplies some government customers, and is expected to close by the end of the summer.

Initially, both businesses will retain their existing brands and offices while the companies develop their integration plans.

The implication there is that there could be a shake-out of duplicate products and staff roles coming later, as often happens with corporate mergers.

We asked what the combined business would be called and who would lead it, but the companies declined to answer.

"This is a defining moment for both ARO and TalkTalk Business," claimed ARO chief Ciaran Rafferty.

"By bringing together our complementary strengths, we are creating a stronger partner with broader capabilities, deeper expertise and greater capacity to invest in innovation, service delivery and long-term customer success."

TalkTalk Business CEO Ruth Kennedy said it represents a key step in the firm's ambitions to become a leading managed services provider.

"The market is evolving rapidly, with organizations increasingly seeking technology partners that can combine strategic expertise, operational excellence and broad service capabilities at scale," she commented. ®