Sky moves into mobile market in O2 agreement

SKY yesterday threw its hat into the increasingly turbulent UK mobile phone market in a deal with O2 operator Telefonica, the latest in a series of manoeuvres shaking up the industry.

The Team Sky cycling hero Mark Cavendish in action. Sky is now extending its reach into the mobile phone market. Picture: Phil Wilkinson

The agreement comes just days after Spain’s Telefonica said it was in talks over a £10 billion deal to sell its O2 network to Three owner Hutchison Whampoa, creating a combined business and the UK’s biggest mobile player.

Sky has been in talks for some time to use the network to operate a mobile service and is understood its plans will be unaffected by the Hutchison deal.

It also comes after rival BT – with which it competes over broadband and telephone customers as well as TV football – announced it was in discussions to buy Britain’s biggest operator EE for £12.5bn.

The main players in mobile and broadband are engaged in a round of deal-making as they vie to offer customers services that also include fixed line and TV, 
in a strategy described by analysts as “quad play”. Sky claimed it was already the UK’s most popular “triple play” provider with almost 40 per cent of its customer base now taking all three of its TV, telephone and broadband services.

It said the “multi-year” deal with O2 – understood to be somewhere between two and ten years – would give it wholesale access to services over Telefonica’s nationwide network as it launches mobile services from 2016.

The Spanish-owned network has already made wholesale deals with other brands including Tesco Mobile and it is thought that opening it up further may help allay possible regulatory concerns about O2’s tie-up with Three narrowing competition.

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Telefonica UK chief executive Ronan Dunne said: “This will widen consumer choice still further and demonstrates the lively competitiveness of the UK market. We look forward to working with Sky.”

Sky chief executive Jeremy Darroch said: “As the UK’s leading brand for home entertainment and communications, Sky has 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 Telefonica UK, we can build on our expertise to launch a range of exciting new services and exploit the opportunities for growth in the fast-changing mobile sector.”

The latest announcement will not affect Sky’s existing tie-up with Vodafone allowing customers to access Sky Sports or Sky’s pay-as-you-go NowTV.