Virgin Media O2 ups pressure on BT with Sky talks - report

According to the Sunday Telegraph, Sky is in talks with Virgin Media O2 about using its full-fibre network. There were few details on either the timeframe or the nature of the investment, but the report still unnerved investors in the telecoms giant. By 1130 BST shares in the blue-chip were off 7% at 148.3p, having touched fallen to as low as 146.9p earlier in the session.

BT is looking to massively extend its Openreach broadband fibre infrastructure, giving 25m premises access to the network by the end of 2026.

Virgin Media O2 - which was created earlier this year via a joint venture that combined Liberty Global’s cable network and Telefonica’s O2 mobile network - is also upgrading its fibre network, however, with plans to expand significantly beyond its current premises.

It has also previously stated it believes there is an opportunity to enter the wholesale market, thereby rivalling BT.

BT has not commented on the report. However, according to Reuters, citing a person familiar with the situation, BT expects Sky to remain a major wholesale partner.

In a note, Jefferies said: "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 [fibre to the premises] in cable areas to attack Virgin Media O2’s dominant market share."