Good news for BT and Vodafone as TalkTalk bidder Toscafund makes £1bn bet that telecoms shares are undervalued.

If you believe Martin Hughes at Toscafund, the sell-off in telecoms stocks this year is utterly overdone.

Plenty of investors hope the man they call The Rottweiller is right.

Since January, BT’s shares are down 41%, Vodafone’s are down 24% and TalkTalk nearly a third.

Hughes knows about the latter all too well, being a 29% shareholder. So, the fact he’s prepared to deploy £1 billion to take it private is an obvious vote of confidence.

Quite why he has such a rosy view is harder to gauge.

TalkTalk has been offered around the market for ages, but none of its rivals bit.

Remembered for its hacking scandal under Dido Harding (now presiding over Test and Trace), the self-styled “challenger telco” is a long-term struggler as a titch in a world of giants.

More challenged than challenger.

Customer service remains an issue and its most recent numbers showed revenues falling 7.5%, albeit in the thick of the covid lockdowns when engineers were unable to connect homes.

Hughes’ case is that the share price is missing the long-term demand for high speed fibre, especially for work-from-homers.

Charles Dunstone, founder and fellow 29% shareholder, takes a similar view but can see there’s no prospect of shares bouncing back anytime soon.

That he’s even considering the offer, having rejected £400 million more from Tosca last year, is proof of that.

Hughes is offering shares in TalkTalk after it’s taken private, so Dunstone can enjoy the upside if it bounces back.

Whether minority shareholders agree this is a good deal is another matter.

Analysts at Barclays - whose investment bankers are advising TalkTalk - put a share price target of 120p on the company. Can they be so wrong?

Tosca, Dunstone and his sidekick David Ross own a collective 69% of the company.

The Takeover Panel must make sure the rest of the investors get a voice.