Game of phones: £22.5bn worth of deals transforming UK mobile, broadband and TV markets

The European pay-TV giant said a partnership with O2 will allow it to launch a so-called quad play offering next year, bundling all four services together for its customers.

 

Sky chief executive Jeremy Darroch said the multi-year deal with O2’s parent company Telefonica UK would “build on our expertise in content, innovation and service to launch a range of exciting new services and exploit the opportunities for growth in the fast-changing mobile sector”. 

 

Sky currently counts 11.5m UK customers across its broadband, TV and landline businesses.

 

The UK telecoms market is currently in flux as fixed-line operators, like BT and Sky, race to add mobile services to their product lineups – while mobile operators, like Vodafone and Three, race to launch their own TV and broadband products.

 

In December BT entered exclusive £12.5bn takeover talks with Deutsche Telekom and Orange to buy their UK mobile network EE. Three’s owner Hutchison Whampoa last week confirmed it had entered exclusive takeover talks with Telefonica to buy its UK operator O2 for £10bn.

 

Meanwhile Vodafone in November announced it would launch broadband and TV offerings this year in the UK, although it has yet to reveal details of whether it will make any acquisitions to achieve this.

 

While these telecoms giants are all racing to bundle packages of products and services together at a discount for consumers, a move that is popular elsewhere in Europe, there is little evidence yet that British consumers have much desire for such an offering.

 

“Consumer demand for quad play remains low with the bulk of interest unabashedly driven by the prospect of significant discounts,” said Enders Analysis analyst Rukshan Mehra in a note this week. Mehra noted that in an Enders survey from May 2014, 70 per cent of those surveyed said they were not interested in quad play. 

 

She admitted this could change as operators push more bundles into the market. “The supply push behind quad play in the UK is much lower relative to other European markets, with only three out of the big eight fixed/mobile providers currently offering both services to consumers in any form,” said Mehra

 

Meanwhile neither of the UK’s existing quad play operators, Virgin Media and TalkTalk, have seen any dramatic takeup of quad play bundles with only 17 per cent and nine per cent of their customers respectively choosing quad play packages.

 

Time will tell whether BT and Sky’s big bets on quad play will pay off in the coming years.