BSkyB has unveiled plans to buy Telefónica UK’s broadband business; a move which statistically makes Sky the second best broadband provider in the UK, behind BT.
BSkyB (British Sky Broadcasting Group plc) was formed in 1990. The merge between Sky Television and British Satellite Broadcasting saw the brand become Britain’s largest pay-TV broadcaster. Having had huge success in broadcasting, Sky entered the broadband market in 2006. Sky broadband has grown rapidly in the last six years and the additional 500,000 Telefonica customers from this week’s deal will accelerate this growth even further.
Telefónica are the owner of O2’s broadband services. When Sky take over Telefónica, they will overtake Virgin Media in having the second largest broadband customer base in the country. Sky currently has 4.2 million broadband subscribers and will accrue an additional half a million from Telefónica, bringing their total to 4.7 million. Virgin Media’s customer base of 4.5 million will now sit in third position. Both companies remain far behind BT who has 6.6 million broadband subscribers in the UK.
The deal with Telefónica – which affects customers of O2 broadband and BE – will cost Sky over £180 million, with a further £20 million payable on completion. Telefónica has stated that they plan to leave the broadband business and focus solely on mobile phone services as they currently have 23.5 million mobile phone customers in the UK. As 4G is rolled out, Telefónica believe that 2013 is the ideal time to exert all of their energies into the mobile phone arm of their business.
So what does the deal mean for O2 and BE customers? Some may be concerned about the upheaval if they are satisfied that they already have the best broadband deal with O2 or BE.
O2 have stated that customers do not need to take any action at this point as the deal is yet to be finalised. O2 have assured customers that they will be contacted by Sky later in the year with further information. O2 have been quite vague about changes to billing, stating that when it comes to payments “nothing will change right away”. However, at some point, O2 customers could see their bills rise as they transfer to Sky which could result in some customers looking elsewhere. O2 currently offers a great deal on home broadband for their mobile phone customers which is not likely to be available once Sky has taken over.