Sky makes multiplay move with Telefónica O2 MVNO deal

Pay TV and broadband service provider, Sky, has signed an agreement with Telefónica UK to launch an MVNO on its network in early 2016. The provider is already well established in the triple-play market, providing premium television, film and sport services, along with residential broadband offerings.

According to Sky, the terms of the partnership agreement will see Telefónica provide wholesale access to 2G, 3G and 4G services to Sky over its nationwide network.

Looking into the UK multiplay market, Ovum’s World Broadband Information Service has highlighted the current numbers of subscribers for operators in both the broadband and TV markets. As of Q3 2014, Sky serves more than 5.3 million home broadband customers, and 10.1 million TV customers. Sky claims 40% of its existing customer base takes out all three of the TV, telephony and broadband services on offer.

The move from Sky into the MVNO market adds to the multiplay discussion which has been growing over the past 12-24 months. Paolo Pescatore, analyst at CCS Insight, reckons the market shift towards a multiplay environment has left Sky with no option but to launch its own MVNO.

“Sky was forced down this route,” he said. “With BT’s plans to launch a consumer mobile offering and the acquisition of EE as well as Vodafone’s plans to offer broadband and TV, Sky had no choice but to launch its own mobile offer”

Pescatore did note, however, that Sky could still be a long term target for Vodafone. “We still believe that Sky is a takeover target for Vodafone, given the mobile operator’s need to have a strong broadband and pay TV offering.”

Speaking of Vodafone, Ed Barton, analyst at Ovum, is surprised that Sky hasn’t gone to Vodafone for its mobile debut. “A slight surprise is that Sky doesn’t appear to be deepening its existing relationship with Vodafone who have been bundling NOW TV access with 4G subscriptions.”

Barton then expanded on Sky’s market position in relation to multiplay offerings. “We see Sky’s entry into mobile as a response to EE and TalkTalk getting into TV and really shaking up the lower priced end of the UK TV market,” he said.

“Sky TV remains a very competitive offering if you look at the relative strength of the content and technology proposition but subscriber growth in the core pay TV segment has levelled off somewhat over the last few years with growth coming predominantly from OTT standalone services under the NOW TV brand. In this context offering mobile is a defensive move: one less reason to consider a lower priced alternative or even dropping pay TV altogether in favour of broadband augmented with occasional NOW TV access and a Netflix or Amazon Prime Instant Video subscription.”

Sky also announced the expansion of its on-demand service, Sky Go, which will now be featured on the Playstation 3 games console, after trials of the service on Playstation 4 were deemed successful. While, in isolation, this news isn’t hugely disruptive, it could be seen to again illustrate Sky’s emphasis on cross-device multiplay services, ahead of next year’s mobile launch. With ongoing mergers and acquisitions in both the TV and mobile sectors, 2015 and 2016 could well see a substantial change to the UK multiplay market.

  • MVNOs North America

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.