Sky ties up with Telefónica for mobile in the UK

Multi-play fever continues in the UK as Sky announces that it’s to become an MVNO on Telefónica’s O2 network in the UK. The move is another indication that a multi-play position is now seen as increasingly important in the UK market, although presumably not important enough, from Sky’s point of view, to actually buy O2. That honour has gone, of course, to Hutchison, pending regulatory approval.

It’s unlikely that the Sky tie-up will be in any way a deal-breaker for the Hutchison merger though - Hutchison presumably would have been appraised of the deal and in any case Sky is just one more MVNO on an already crowded MVNO roster at O2. In addition to its youth-oriented GiffGaff it provides the MVNO platform for Tesco’s successful mobile service.

Sky will be a powerful channel for wholesale capacity and a means for increasing  O2’s share - albeit at a wholesale level - of the UK market. The company has become the No 2 in the UK broadband market after BT (ironically partly courtesy of Telefonica O2 which sold its broadband network to Sky in 2013) and therefore already has more than 5 million customers. Of these, 40 per cent take all three of Sky’s current plays - TV, fixed phone and broadband.