Sky seeks the ‘holy grail’ with own mobile service

Broadcaster may join new £10bn merged giant to offer total package

SATELLITE television broadcaster Sky could launch its own mobile phone service by tying up with the giant company which would be created by a £10.3billion merger of O2 and Three.

The broadcaster, which has more than 10.5million TV subscribers, has been touted as a potential buyer of O2 itself, but sources close to the company said the broadcaster would prefer a business partnership with the merged mobile operators.

Sky could then offer consumers a package of services combining TV, broadband, landline and mobile. Offering all four is known as a quadplay in industry jargon and is regarded as the holy grail for broadcast and telephone groups.

‘Should a merged O2/Three want to move into the quadplay market they will be looking for a partnership and that is not something Sky will shy away from,’ said an industry executive.

‘Sky has kept a close eye on the mobile market. It has a very strong brand. Sky could share the O2/ Three network and it would be a low-risk, lowcapital way of taking a punt on mobile.

‘If the consumer is interested, Sky would be in a good position.’

Sky, which declined to comment, is still working through its £7billion merger with Sky Italia and Sky Deutschland, a deal which was formally completed last November.

This will give the merged company, led by highly regarded Sky chief executive Jeremy Darroch, access to 20million customers across five countries in Europe.

China’s richest man, Li Ka-shing, revealed on Friday that his company Hutchison Whampoa is in exclusive talks to buy Britain’s second biggest mobile operator O2, owned by Spain’s Telefonica. He already owns the Three mobile phone business.

A merger of O2 and Three would create Britain’s biggest mobile phone operator. EE, owned by Orange and Deutsche Telekom and itself in £12.5billion talks to merge with BT, would be the second largest while Vodafone would be third.

The proposed tie-ups will all require regulatory clearance. The UK currently has four major mobile operators – EE, Vodafone, O2 and Three. The firms have long argued that bigger companies are better placed to finance the enormous capital expenditure required in the mobile market.