BSkyB is buying the broadband arm of O2's parent company Telefonica UK for £200 million. The deal will make BSkyB the second biggest UK broadband company, helping it hop ahead of Virgin Media.
The number of people getting their Internet fix from Sky will jump from 4.2 million to 4.7 million. Virgin Media currently has 4.5 million broadband customers, while BT remains first in the UK with 6.6 million.
Sky will pay £180 million, with another £20 million depending on the successful completion of transfer of customers between the two businesses. Not only will it gobble up O2's broadband business, but also Telefonica's BE brand. Providing it gets clearance from the regulatory bodies, the deal should be complete by the end of April.
Telefonica has wanted out of the UK broadband market for a while now in order to focus on its 4G rollout. Like Virgin and Three, O2 won a chunk of 4G spectrum in the recent auction held by Ofcom, and is expected to launch its super-fast service in the spring. Telefonica currently has around 23.5 million mobile customers in the UK.
Sky launched its broadband offering in 2006, and now has 3.6 million "triple-play" customers (i.e. those who come to it for all their TV, broadband and landline needs).
BSkyB's chief executive Jeremy Darroch said it was the fastest-growing provider, and that acquiring Telefonica's UK broadband business would help Sky "accelerate this growth."
He added: "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."
Telefonica 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."
Rupert Murdoch's arch rival Jone Malone is buying Virgin Media, so BSkyB's move could be an attempt to smack down Malone and his company, Liberty Global. Following the announcement of the Liberty Global deal, Virgin Media's chief executive said it would help his company "grow faster and deliver enhanced returns," so I think we've got a fight on our hands in the UK broadband market.
Do you get your broadband from Telefonica UK? Will you be happy about becoming a Sky customer? Let me know what you make of it in the comments, or on Facebook.
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Comments 13
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anonymous 1 March, 2013 10:22
>>The number of people getting their Internet fix from Sky will jump from 4.2 million to 4.7 million
Don't forget to factor in all the people who will jump ship then this takes place .... I reckon BT will see a sudden increase in new customers !
anonymous 1 March, 2013 10:33
BT Infinite here I come!
anonymous 1 March, 2013 11:03
:--(
I've been thinking about leaving O2 for a while, I think this clinches it.
mark2410 1 March, 2013 11:25
and cue the exodus of Be and O2 customers to someone else
anonymous 1 March, 2013 11:37
Looks like it may be a move to BT as I was thinking about it anyway as they provide better speed and now offer unlimited data now
anonymous 1 March, 2013 12:05
Jeez Cnet, do you really have to use this cheap, cheesy library photography in your articles?
anonymous 1 March, 2013 13:14
I have to admit I'm feeling devastated! Was on sky once and left due to dreadful services. Went over to O2 and haven't had a problem with the 4 years I've been with them. The thought of going back to sky makes me sad.
anonymous 1 March, 2013 14:30
Not a happy bunny, just agreed a new 12 month broadband contract with O2 3 weeks ago which involved them halving my fee and now they want me to jump into bed with the devil that is Sky?! Thanks O2...NOT!! Apparently I can't cancel it, I have to wait until Sky takes over and quit then!!
anonymous 1 March, 2013 14:41
I've just cancelled my broadband with them, which I was going to do this month anyway. However, I did point out that the "change of ownership" was one of the factors.
"What do you mean, change of ownership?" came the reply.
O2 used to very good and I've been generally pleased with the service I've had with them for the past three years, but their refusal to invest in FTTC and dwindling download speeds has prompted me to defect - this was the last straw.
anonymous 1 March, 2013 22:58
Dont forget Plusnet people....they are pretty good :)
anonymous 2 March, 2013 06:03
I am impressed with the effort you have so obviously put into this content. I am also impressed with your point Buying a Business of view on this topic, especially since you have made your points so clear.
anonymous 2 March, 2013 11:38
I deliberately steer clear of Sky and moved to O2 for a phone bundle deal
Will absolutely be moving again - don't count me in your expected uplift
anonymous 5 March, 2013 20:24
I have been very happy with o2, great service, and very helpful staff, I left BT due to awful (actually it wasn't as good as awful) service and conflicting advise from staff. The thought of getting involved with Sky fills me with dread, so it looks as though the search will be on for a new provider.
I have just renewed my contract with o2, but I wish they had let me know that they were selling out to Sky, as this would have undoubtedly adversely affected my decision to stay with o2.
It will indeed be a very sad day when we lose o2 broadband to Sky, and I am pretty sure that there will be many more o2 customers out there, who share my views.