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Sky inks £180m deal for Telefonica’s UK broadband business

BSkyB has agreed to buy Telefonica UK’s broadband business, in a deal that will establish Sky as the UK’s second-biggest broadband provider behind BT and ahead of Virgin Media.

Under the deal, Sky will pay £180 million for Telefonica UK’s broadband and fixed-line phone customers served by its O2 and BE brands – which count for more than half a million customers.

Sky may also pay up to £20 million more on completion of the deal, dependent on the delivery and completion of the process that will see Telefonica’s customers migrated over to Sky’s network.

Sky CEO Jeremy Darroch said the deal, which is due to complete by the end of April 2013 subject to regulatory clearance, will help to accelerate Sky’s growth in the UK broadband market.

“We believe that the O2 and BE consumer broadband and telephony business is a great fit, with customers used to high-quality products and strong levels of customer service,” he said.

Sky entered the UK broadband market in 2006 and, as of December 2012, claimed 4.2 million broadband customers and 4 million telephony customers.

Some 3.6 million of Sky’s TV customers currently also subscribe to its broadband and phone services. Sky said that the new deal will help to “meet the growing demand from customers to take multiple products.”

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