(2 March 2013 6:00 pm) 

MUMBAI: British Sky Broadcasting Group (Sky) has reached an agreement with Telefónica UK for the proposed acquisition of its O2 and BE consumer broadband and fixed-line telephony business.

The transaction 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.

Under the terms of the agreement, Sky will pay a consideration of £180 million to Telefónica UK for the consumer broadband, home phone and line rental customers served by the O2 and BE brands.

An extra contingent amount, not exceeding £20 million, may be payable dependent upon the successful delivery and completion of the customer migration process by Telefonica UK. Post completion, O2 and BE customers will be migrated onto Sky's fully unbundled network, supported by a nationwide all-fibre core, which reaches 84 per cent of all UK homes.

Telefonica UK's consumer broadband and fixed-line telephony customers, of which there are currently over half a million, will become Sky customers for those services on completion. By creating the UK's second-largest home broadband provider, the acquisition will deliver further advantages of scale for Sky's home communications business.

Sky CEO Jeremy Darroch said, "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."