Sky to enter mobile sector

UK pay-TV operator Sky is set to add a range of mobile voice and data services to its customer offering for the first time following agreement of a new partnership with Telefónica UK which will see it become a Mobile Virtual Network Operator (MVNO).

Under the terms of the multi-year deal, Telefónica UK will give Sky wholesale access to 2G, 3G and 4G services over its popular nationwide network. Leveraging its market-leading capabilities in customer service and innovation, Sky plans to launch its first mobile telephony services to customers in 2016.

Sky’s move into the mobile sector builds on its success as the UK’s fastest-growing home communications business. Just seven years after launch, Sky has grown organically to number two in the home broadband market attracting more than 5 million customers with its offer of better choice and value. Sky has also established itself as the UK’s most popular triple-play provider with almost 40 per cent of its customer base now taking all three of TV, telephony and broadband.

In addition, Sky has developed Europe’s leading mobile TV service in Sky Go. With 5.7 million registered users, Sky Go meets customers’ growing demand to watch content across multiple devices in and out of the home, offering a choice of up 70 live channels and a wide range of content On Demand, whenever and wherever customers want it.

Telefónica UK has an established track record in successful wholesale partnerships, supporting some of the UK’s leading MVNOs (mobile virtual network operators) including the number one player Tesco Mobile. Telefónica UK’s strong network credentials have helped its O2-branded service enjoy industry-leading customer satisfaction and are underpinned by a unique commitment to 98 per cent 4G coverage by 2017.

Jeremy Darroch, Group Chief Executive, Sky said that as the UK’s leading brand for home entertainment and communications, Sky had a “proven ability” to launch new services, at scale. “We know our 11.5 million customers trust Sky to offer them the best quality and choice and have an appetite to take more from us. Through our partnership with Telefónica UK, we can build on our expertise in content, innovation and service to launch a range of exciting new services and exploit the opportunities for growth in the fast-changing mobile sector,” he added.

Ronan Dunne, Chief Executive of Telefónica UK, welcomed Sky to its roster of innovative, successful partnerships, through which it helps partners grow their offer to customers. “Sky understands the importance of a strong network and excellent customer experience and has made us a trusted partner to help deliver brilliant services. This will widen consumer choice still further and demonstrates the lively competitiveness of the UK market. We’re looking forward to working with Sky,” he declared.

Paolo Pescatore, Director of Apps and Media at CCS Insight, believes the move from Sky is an acknowledgement of its vulnerability without a mobile offering and reaffirms the importance of a multi-play package. “Sky was forced down this route. It can’t afford to be left behind in the multi-play market. This deal with O2 underlines the importance of offering a multi-play package,” he advised. “With BT’s plans to launch a consumer mobile offering and the acquisition of EE as well as Vodafone’s plans to offer broadband and TV, Sky had no choice but to launch its own mobile offer,” he suggested.

“For now, Sky is the undisputed leader in triple-play services. Without mobile, it was vulnerable in the future. However, it is surprising that the first Sky mobile service will not be offered sooner than 2016,” he noted.

“We still believe that Sky is a takeover target for Vodafone, given the mobile operator’s need to have a strong broadband and pay-TV offering. Sky’s in a great position. Our research suggests that consumers want to buy multi-play services from a single provider if they can – and that should mean more revenue and ultimately more profits for Sky,” he concluded.

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