Sky buys Telefónica’s UK broadband business for stg£200m

1 Mar 2013

BSkyB has acquired Telefónica’s broadband business in the UK for stg£200m in a deal that will make Sky the second biggest broadband player in the UK. The acquisition includes Telefónica’s O2 and BE consumer broadband and fixed-line telephony business businesses.

Telefónica UK’s consumer broadband and fixed-line telephony customers, of which there are more than half a million, will become Sky customers.

Under the terms of the agreement, Sky will pay a consideration of stg£180m to Telefónica UK for the consumer broadband, home phone and line rental customers served by the O2 and BE brands. An extra contingent amount, not exceeding stg£20m, may be payable dependent upon the successful delivery and completion of the customer migration process by Telefónica UK. 

Post completion, O2 and BE customers will be migrated onto Sky’s fully unbundled network, supported by a nationwide all-fibre core, which reaches 84pc of all UK homes.

UK’s fastest-growing broadband brand

“Sky has been the UK’s fastest-growing broadband and telephony provider since we entered the market six years ago. From a standing start in 2006, we have added more than 4.2m broadband customers,” Sky CEO Richard Darrach explained.

“The acquisition of Telefónica UK’s consumer broadband and fixed-line telephony business will help us accelerate this growth.”

Sky has 4.2m broadband customers and 4m telephony customers (as of 31 December 2012). In that time, Sky has established itself as the UK’s most popular triple-play provider with 3.6m triple-play customers, one-third of its base.

Sky has added 382,000 customers (at 31 December 2012) for standalone home communications since the introduction of the service in 2010.

Sky launched triple play broadband services in Ireland last month through an infrastructure deal with BT.

“Sky offers great value, totally unlimited broadband which includes unlimited fibre services,” BT CEO Ronan Dunne said.

“As we focus on delivering best-in-class mobile connectivity, including next-generation (4G) services, we believe this agreement is the best way of helping our customers get the highest quality home broadband experience from a leading organisation in the market.”

A spokesman for O2 in Ireland said the deal will have no implications for the O2 broadband business in Ireland. Yesterday, Telefónica said it had to take a €527m write-down on its Irish business following a 27pc decline in profit across the Telefónica group.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years