Telefonica is selling-off its UK fixed line business, which operates using the O2 and BE brands, as it focuses on “delivering best-in-class mobile connectivity, including next-generation 4G services”.
The assets are being bought by integrated media and communications company Sky, which is paying £180 million, with an additional £20 million payment possibly payable dependent on the successful completion of a customer migration process.
In a statement, it was noted that the deal “will make Sky the second-largest provider in the UK broadband market, building on its existing position as the UK’s fastest-growing broadband and telephony business”.
Telefonica UK has more than 500,000 fixed line telephony and broadband customers, who will now be transitioned to Sky. As of the end of 2012, Sky had four million telephony and 4.2 million broadband customers.
The deal is due to be completed by the end of August 2013, subject to regulatory clearance.
In a statement, Emeka Obiodu, telco strategy analyst at Ovum, said: “At a time when telcos across Europe are intensifying efforts to offer converged (fixed, mobile, broadband, TV) services, mobile telcos in the UK are making themselves much more reliant on mobile. EE still retains a presence in the fixed telecoms space but its offering is increasingly infrastructure-light. Ultimately, this is a dangerous scenario as it might reduce the strategic maneuvererability of the UK’s mobile telcos in a converged future.”