Sky link to O2?

Sky is talking to Telefónica about a link with the telco’s UK MNO foreshadowing a complete quad-play proposition. The talks come as BT confirms exclusive negotiations to buy 02 rival EE, having previously targetted O2.

According to an FT report, Sky and Telefónica have been talking since late last year, as Sky has assessed its mobile options.

Hutchison Whampoa, which owns the Three network, has signalled it would offer more than £9 billion (€11.8bn) for O2 UK before Christmas.

But Sky is unlikely to acquire O2, say observers, as the pay-TV company currently has net debt of more than three times its EBITDA following the £7 billion European expansion.

Instead, it is offering a broad partnership, combining O2’s mobile service and customer base with Sky’s pay-TV content, broadband and fixed-line telephony. In March 2014, Sky paid £200 million for O2’s fixed line and broadband business, covering about 500,000 customers. Analysts have also speculated that a deal could involve the exchange of shares rather than cash, which would give Telefónica a stake in the combined business.

Sky’s management has said there is little evidence that consumers want to purchase mobile phone contracts together with household broadband and pay-TV. Such bundles – with low prices – have gained market share in Spain.

 

 

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