BT has stated that it expects Sky to remain a major wholesale partner for its full fibre network development in spite of a reported deal between the Comcast-owned operator and Virgin Media O2.
An earlier report from The Telegraph stated that Sky was in talks with Virgin Media O2 to invest in its own fibre build. Virgin Media O2 plans to heavily expand its broadband network over the next seven years, building on the 1.2 million homes it has connected to its full-fibre network.
Sky has reportedly also held talks with Vodafone and TalkTalk about the companies becoming wholesale customers.
BT meanwhile has pledged to spend £15 billion in upgrading 25 million homes and businesses from copper to fibre by the end of 2026.
The initial Telegraph report hit BT’s shares hard in early trading, with the stock price dropping by 8% on Monday morning. Early in the day, shares were down to their lowest point since March.
A source familiar with the situation cited by Reuters said that Sky is still expected to use BT even if it ties up a deal with Virgin Media O2 to take some of its volume.
In a guidance to investors, analyst Jefferies warned Sky against investing in Virgin’s build, and said that BT’s infrastructure build out would likely be completed first.
In a statement, the analyst said: “The nature of investment is not made clear but, to maximise value, we believe Sky would need to make an irrevocable anchor tenant commitment. That would be commercially very risky. Sky would face highly uncertain deployment costs/timeframe and give up a compelling opportunity to leverage Openreach FTTP in cabled areas to attack VMO2’s dominant market share.”
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