updated 07:13 am EST, Fri March 1, 2013
Deal worth $307M leaves Telefonica to work on 4G services
BskyB is acquiring Telefonica UK's landline and home broadband services. The deal, claimed to be worth around £200 million ($307 million) will see Sky become the second largest Internet service provider in the country, thanks to the addition of an extra 500,000 customers from Telefonica's Internet services, O2 and BE.
Initially, Sky will be paying Telefonica £180 million ($273 million) for the broadband and fixed-line services, with another £20 million ($30 million) due upon completion. The 500,000 Telefonica customers will then be integrated with the existing 4.2 million Sky broadband and 4 million Sky phone customers, 3.6 million of which also count as triple-play customers in using Sky's phone, broadband and satellite TV services.
In a statement Telefonica chief executive Ronan Dunne said that the deal would allow Telefonica to "focus on delivering best-in-class mobile connectivity, including next generation (4G) services." Telefonica spent around £550 million ($843 million) on radio spectrum in UK regulator Ofcom's 4G auction last month, which will allow O2 to offer high-speed mobile connections in the coming months.
While it still requires approval, Sky estimates that the acquisition will be completed by the end of April.