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Sky To Buy O2 Broadband For £180 Million

Steve McCaskill is editor of TechWeekEurope and ChannelBiz. He joined as a reporter in 2011 and covers all areas of IT, with a particular interest in telecommunications, mobile and networking, along with sports technology.

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Sky says acquisition will make it the UK’s second largest broadband provider

BSkyB has agreed a deal with Telefonica UK to purchase O2 and BE’s consumer broadband and fixed-line telephone service in a move that will make Sky the second largest broadband provider in the UK.

Sky will pay Telefonica £180 million and has set aside a contingency fund of up to £20 million which may be payable following the successful completion of the customer migration process.

Half a million O2 broadband users will switch to Sky as part of the deal, adding to the 4.2 million Sky broadband customers and 4 million telephone customers that the company already has.

Sky Broadband

o2rugbywtfSky says that the acquisition will deliver advantages of scale to its business and allow it to meet growing demand from customers for ‘triple-play’ bundles, which include television, broadband and phone services.

It says that it currently has 3.6 million such subscribers, making it the largest triple-pay provider in the UK.

“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,” said Jeremy Darroch, Sky chief executive. “We look forward to welcoming these new customers to Sky and giving them access to our wide range of high-quality products, great value and industry-leading customer service.”

Focus on O2 mobile

Telefonica UK says that it has agreed to the sale of O2’s broadband business in order to focus on its mobile network, but analysts have warned that it could lose customers who will be dissatisfied at no longer having cheap broadband bundled with their mobile contract.

“O2 could see a loss of mobile customers, who, no longer being able to enjoy a cheaper broadband service by doubling up with their mobile, may start shopping around for a better deal,” warned Marie-Louise Abretti, telecoms expert at uSwitch, who added that Sky would also do well not to repeat the mistakes made by TalkTalk when it acquired Tiscali in 2009.

“However, customers may be concerned about how the transition is handled by Sky. Following TalkTalk’s take-over of Tiscali in 2009, Ofcom hit the providers with £3 million in fines for wrongly billing customers, mainly caused by problems with integrating accounts,” she said. “It’s vital that Sky learns from this and ensures that consumers don’t lose out as part of this deal.”

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