For many years Sky TV has been a name associated with modernity and choice. However, with more customers streaming online, and TV watching going down in the UK, Sky has reportedly been in contact with O2, owned currently by Spanish telecoms company Telephonica.
Sources suggest this will not be full acquisition, more like a mutually beneficial partnership. The specifics of any potential deals are unknown as of the moment, but it would be a huge move for Sky and likely have them leading the sector in the UK market. The rationale behind the moves is to both avoid being left behind and also to boost the slowing growth of their UK market share.
The move is likely to have been influenced by BT’s talks with EE for £12.5 billion to provide home phones, mobile, TV and broadband. This sort of offering would likely leave Sky behind as customers can get better deals on multi-stream packages with BT.
One of the big questions that economists are asking is can Sky afford a deal with O2? With large scale acquisitions of German and Italian similar companies to extend their reach into Europe, critics of the move have suggested that BT is unlikely to have the depth of pocket to be able to present a favourable enough deal for O2 to consider it.
On top of all this Virgin Media which already has the 4 offerings in various packages are looking for growth and acquisition. Alongside Virgin, Vodaphone sold Verizon for £85 billion, and whilst it spread £50 billion of this to shareholders, they retained £35 billion for future growth and acquisition. So Sky will find the market they are trying to burst into a crowded one, full of established companies, and big ones at that.