Sky is the latest company to have approached Telefonica about a tie-up with its British mobile operator O2, although a person familiar with the matter has told SatelliteFinance that an acquisition by the DTH giant is not on the cards at this stage.
Sky,…
Sky is the latest company to have approached Telefonica about a tie-up with its British mobile operator O2, although a person familiar with the matter has told SatelliteFinance that an acquisition by the DTH giant is not on the cards at this stage.
Sky, which is being advised by Lazard, would instead be interested in a partnership with O2 which could enable the companies to offer quad-play services to rival BT – itself in final negotiations to acquire O2’s competitor EE.
The talks are in line with comments made by Sky’s CEO, Jeremy Darroch, when the company announced its Q3 results in the autumn.
“We talk to the mobile operators all the time, across a whole range of things,” Darroch said.
“Everything from distribution of our product to distribution of theirs. So don’t be surprised if you hear about us talking, but don’t assume that that means that we’re going to go and do anything.”
Nomura analyst Matthew Walker thought that Sky buying O2 was unlikely.
“Subject to a statement from Sky we would find such an acquisition for Sky surprising given management have said there is limited evidence for mobile becoming a household purchase and that if it did an MVNO would be the preferred response,” Walker wrote in a note to clients.
“In addition the company have levered up to over 3x for Sky Europe and has promised its shareholders it will focus on de-leveraging. Such a move for O2 would require substantial equity issuance.”
In November, the broadcaster formerly known as BSkyB completed the takeovers of its sister companies in Italy and Germany – Sky Italia and Sky Deutschland – in a debt-heavy transaction.
Sky and Telefonica declined to comment.
Telefonica’s share price has risen almost 4% compared to its closing price at the end of last week, as reports suggest its British mobile operator O2 has a number of options going forward after being passed over by BT in December.
BT instead chose to buy O2’s biggest rival, EE, sparking a flurry of discussions between the UK’s remaining players across the mobile, fixed-line, broadband and pay-TV sectors.
On 18 January, Hutchison Whampoa, which owns the UK’s smallest mobile network operator Three, was reported to be in talks to buy O2 for up to £9bn.
The figure the Hong Kong group, advised by Moelis, was reported to be prepared to pay was below the £9.4bn that Berenberg analyst Paul Marsch said his firm valued O2 at. Telefonica is being advised by UBS.
