Sky seals deal for Telefonica's BE and O2 broadband

Sky has agreed a fee with Telefonica for O2 and BE's fixed line-telephony business, which will make the satellite giant the second-largest broadband provider in the UK.

With bundles of services becoming increasingly popular, and our methods of consuming content changing, Sky is well aware of the importance of a decent broadband offering.

The company was already offering many of its customers a broadband component to their package, but this deal makes it considerably larger in this sphere.

• Broadband deals
• BT broadband deals
• Virgin broadband deals

£200 million

Sky will pay £180 million for BE and O2 broadband, plus potentially another £20 million if the migration of customers goes to plan.

All existing BE and O2 broadband customers will be migrated onto Sky's unbundled network when the deal is rubber-stamped.

Sky has already picked up 4.2 million broadband users, 3.6 million of which also subscribe to telephone and TV services (known as triple-play).

Sky's direct rivals have major internet offerings, so this move makes a lot of sense. Virgin Media's fibre cable network gives it a speed advantage over pretty much everyone, and communications giant BT owns much of the UK's current infrastructure - although it is currently playing catch-up on fibre and investing heavily to update the ageing copper wire network.

O2 broadband and BE have shrunk drastically in the last couple of years, but still boast more than half a million users - a significant boost for Sky's user base.

For O2 customers who want to know more about the potential changes to their services, a page has been set up at http://www.o2.co.uk/broadband/broadbandchanges.