Telefónica UK’s consumer broadband and fixed-line telephony customers, of which there are currently over half a million, will become Sky customers for those services on completion. By creating the UK’s second-largest home broadband provider, the acquisition will deliver further advantages of scale for Sky’s home communications business.

Under the terms of the agreement, Sky will pay a consideration of £180 million to Telefónica UK for the consumer broadband, home phone and line rental customers served by the O2 and BE brands. An extra contingent amount, not exceeding £20 million, may be payable dependent upon the successful delivery and completion of the customer migration process by Telefónica UK. Post completion, O2 and BE customers will be migrated onto Sky’s fully unbundled network, supported by a nationwide all-fibre core, which reaches 84% of all UK homes.

Following sustained growth in demand for broadband and home telephony since it entered the home communications market six years ago, Sky has built a business with 4.2 million broadband customers and 4 million telephony customers (as at 31 December 2012). In that time, Sky has established itself as the UK’s most popular triple-play provider with 3.6 million triple-play customers, one third of its base. This transaction will help Sky meet the growing demand from customers to take multiple products.

BSkyB Ltd.