1 March 2013

Sky buys O2 broadband business for £200m

Sky is poised to become the second largest broadband supplier in the country when the £200m deal is completed.

BSkyB have agreed a deal to buy the O2 and BE broadband and landline business from Telefonica for £180m up front with a further £20m subject to successful migration of the 500,000 existing customers.

The deal will make Sky the second largest broadband supplier in the UK jumping ahead of Virgin Media's 4.5m customers and closing the gap on market leader BT with 6.5m.

BSkyB's chief executive Jeremy Darroch said: "From a standing start in 2006, we have added more than 4.2 million broadband customers. The acquisition of Telefonica's UK consumer broadband and fixed-line telephony business will help us accelerate this growth”.

O2 say the sale is to enable them to focus on giving their customers the best mobile experience, including next generation (4G) services. Ronan Dunne, Chief Executive of Telefonica said: "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 is subject to regulatory clearance but is scheduled to be completed by the end of April.

Dividing the price paid by the number of customers gives us the interesting statistic that Sky are effectively paying £400 for each customer assuming a 100% successful migration.