BSkyB to buy Telefónica UK’s broadband business in a £200m deal
BSkyB is to buy Telefónica UK’s broadband business in a £200m deal, leapfrogging Virgin Media to become second in the UK broadband market behind BT.
As a result of the deal announced on Friday, Sky’s broadband subscriber base, which was 4.2 million at the end of last year, will grow to 4.7 million with the addition of Telefónica UK’s 500,000 broadband and fixed-line telephony customers.
It will overtake Virgin Media, which has 4.5 million, but remains some way behind BT’s 6.6 million.
Sky has grown its broadband business from a standing start in 2006 and now has 3.6 million “triple-play” customers who take television, broadband and telephony.
The Telefónica deal will cost Sky £180m with a further £20m payable dependent on the successful completion of the transfer of customers between the two businesses. The deal also includes Telefónica’s BE brand in the UK.
The BSkyB chief executive, Jeremy Darroch, said:
“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 4.2 million broadband customers. The acquisition of Telefónica UK’s consumer broadband and fixed-line telephony business will help us accelerate this growth.
“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. 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.”
Telefónica UK’s consumer broadband and fixed line telephony business currently has just over half a million customers. They will become Sky customers on completion of the deal.
The Telefónica UK chief executive, 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.”
The acquisition will be funded from existing cash reserves and is due to complete by the end of April 2013, subject to regulatory clearance.