TalkTalk is scrambling to finalise a £200m lifeline from founder Sir Charles Dunstone as the company seeks to stave off collapse.

In its latest annual report, seen by The Telegraph, TalkTalk’s directors warned there was a risk that the company would collapse “in August 2024 or sooner”.

They added: “These risks represent a material uncertainty that may cast significant doubt upon the group’s ability to continue as a going concern such that it may be unable to realise its assets and discharge its liabilities in the normal course of business.”

The troubled telecoms firm is currently locked in discussions with lenders to refinance more than £1bn in outstanding debt, as looming repayment deadlines put its future at risk.

TalkTalk, which has 3.6m broadband customers across the UK, has warned it is yet to secure sufficient new funding or extend the deadlines on its existing debt facilities.

As a result, the company is expected to breach its debt covenants in August – a move that would lead to an “imminent loss of liquidity” and push the business into insolvency.

Sir Charles and TalkTalk’s other main shareholders, led by private equity firm Toscafund, have said they are willing to pump an extra £200m into the company. If confirmed, this would ensure it can keep operating in the short term.

However, discussions are still ongoing and it is thought that the shareholders will demand a debt reduction from lenders in exchange for the funding. Should a breach occur next month, TalkTalk will have a grace period until October 30 to secure new terms.

TalkTalk is also still facing uncertainty over debts totalling more than £1bn that are due for repayment in the coming months.

A £330m revolving credit facility is due for refinancing in November. The Telegraph revealed in May that the banks behind the loan are looking to reduce their exposure to as little as £150m. TalkTalk also has £685m in bonds due for repayment in February 2025.

The escalating debt crisis comes amid a squeeze on TalkTalk’s underlying broadband business, which has been hit by tough competition and surging inflation.

TalkTalk’s pre-tax loss ballooned from £70m to £127m in the year to March as inflation drove up operating costs. The company also saw its finance costs increase from £106m to £134m as interest rates hit their highest level in 16 years, with interest on loans jumping from £44m to £74m.

TalkTalk’s customer base declined by 334,000 over the year as it slashed sales and marketing costs. The company said it had also refocused its customer strategy on “value over volume”.