Sky buys up O2’s broadband customers
Half a million O2 broadband customers will be transferred to Sky, which will become the UK’s second-largest broadband provider as a result of the deal.
O2 said it was shedding the broadband side of the business to focus on its mobile phone operation, including the superfast 4G network recently green-lit by the regulator.
Sky, which paid O2’s owner Telefonica £180m for the deal, will now have 4.7m broadband customers – more than Virgin Media and TalkTalk but still fewer than BT, which had itself considered bidding for O2’s home internet arm.
The deal is due to be completed in April.
Profit margins for broadband operators have been squeezed as more and more companies vie for business. Firms like BT, Sky and Virgin can afford to make small margins on broadband, because it gains them more viewers for their TV and movie services – and it is the advertising surrounding that which brings in the money.
Emeka Obiodu, telco strategy analyst at Ovum, said: “The battle for pay-TV and broadband supremacy in the UK has now intensified strongly. BT, the largest broadband provider, has spent heavily to win TV rights, and earlier this week, took over ESPN’s UK and Ireland TV channels.
“Now BSkyB, the UK’s largest pay-TV provider, has moved swiftly to become the second largest broadband provider.”
The largest trade union in O2, the CWU, said it had received assurances from the company that there will be no redundancies as a result of the sale.