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UPDATE 1-Toscafund to buy UK broadband firm TalkTalk in 1.1 bln stg deal

* TalkTalk recommends 97 pence-a-share offer

* Buyers say TalkTalk has a brighter future as a private company

* Chairman Dunstone says will continue to be major shareholder (Adds details, quotes, shares)

LONDON, Dec 17 (Reuters) - British broadband company TalkTalk said on Thursday it has agreed a 1.1 billion-pound ($1.5 billion) takeover by shareholder Toscafund and private-equity investor Penta.

The buyers said TalkTalk would be able to access more debt and equity options as a private company and would not face the regulatory burdens of being listed.

The value of the 97 pence-per-share agreed offer is unchanged from a proposal from Toscafund, the second largest shareholder in TalkTalk with a 29.5% stake, on Oct 8.

TalkTalk investors can receive cash or unlisted shares.

The deal has the backing of TalkTalk founder and chairman Charles Dunstone, who owns nearly 30%. He said he was pleased to have the opportunity to continue to be a major shareholder.

“As the UK transitions to full fibre we have a hugely challenging, but exciting opportunity,” he said.

“Being a private company would allow us to accelerate adoption and focus on our role as the affordable provider of fibre for businesses and consumers nationwide.

“The telecoms industry is going through a fundamental re-set and we are keen to play our part in it.”

TalkTalk provides broadband, fixed-line, TV and mobile services to more than 4 million people.

In recent years it has sought to differentiate itself from rivals such as BT, Virgin Media and Sky , by returning to its foundations as a value-focused provider.

Tosco-Penta said TalkTalk had performed resiliently through the COVID-19 pandemic, which has underlined the vital importance of broadband, but there had been a material decrease in its share price.

TalkTalk’s shares had fallen 28% from 116 pence at the start of the year to 83 pence before the bid interest was made public in October. They were trading up 2.7% at 100 pence in morning deals on Thursday.

The recommended deal came as TalkTalk published it first-half results, showing a 9 million pound hit from COVID-19. Headline revenue fell 6.2% year-on-year to 717 million pounds, it said, while headline core earnings were down 12.9% to 122 million pounds.

Chief Executive Tristia Harrison said: “Lockdown has taught us that fast, reliable and affordable connectivity is more important than ever, and we have seen excellent network performance despite a 40%+ increase in data usage.” ($1 = 0.7372 pounds) (Reporting by Paul Sandle Editing by William Schomberg and Susan Fenton)

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