BSkyB now larger than Virgin Media
Friday 01 March 2013 08:36:19 by Andrew Ferguson

Sky has announced it is to acquire the UK fixed line broadband and and telephone services from Telefónica. This acquisition will make Sky the second largest broadband provider in the UK at around 4.76 million broadband customers.

There is to be an initial payment of £180 million to Telefónica for the consumer broadband, home phone and line rental customers with a further £20m payment upon successful completion to the Sky full LLU network.

"Sky has been the UK’s fastest-growing broadband and telephony provider since we entered the market six years ago. From a standing start in 2006, we have added more than 4.2 million broadband customers. The acquisition of Telefónica UK’s consumer broadband and fixed-line telephony business will help us accelerate this growth.

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. We look forward to welcoming these new customers to Sky and giving them access to our wide range of high-quality products, great value and industry-leading customer service."

Jeremy Darroch, Sky’s Chief Executive

Sky is making this acquisition from its cash reserves, which is something that O2 and Be have lacked, but with Sky not offering consumers options such as ADSL2+ Annex M and static IP addresses we would be expecting to see a lot of Be customers who had held loyal to the brand to start looking around for a provider with similar options. Interestingly the acquisition talks about the consumer arm, with no mention the O2 Wholesale arm, the wording around migrations suggests that Telefónica will retain their broadband network and thus can continue to operate its small wholesale network.

While it is clear in time that customers will be moved to the Sky full LLU network there is no immediate need to panic, we can expect there to be a hiatus now while the migrations are planned, which gives plenty of time for those people who have an aversion to fully unbundled services to look at the options other smaller providers offer or make the leap to a FTTC service.