BSkyB takes UK's No. 2 broadband spot with O2, BE Broadband acquisition

BSkyB (Sky) will immediately become the second largest broadband provider under BT (NYSE: BT), surpassing the country's largest cable MSO Virgin Media (Nasdaq: VMED), with its purchase of Telefonica's (NYSE: TEF) O2 and BE broadband subsidiaries.

Under the terms of the agreement, the service provider will pay an initial £180 million ($270.7 million) for the consumer broadband, home phone and line rental customers served by the O2 and BE brands in addition to another £20 million ($30.1 million) after the customers have been migrated to Sky's network.

When the deal is completed, O2 and BE customers will be migrated onto Sky's unbundled broadband network, which is supported by its all-fiber core network, which currently reaches 84 percent of all homes in the U.K.

By selling these units to Sky, Telefonica said it would be able to devote more of its attention to expanding its 4G wireless services.

Broadband growth has been swift for Sky. Over the course of seven years, the service provider's broadband subscriber base has grown to 4.2 million.

Jeremy Darroch, Sky's CEO, said, "The acquisition of Telefónica UK's consumer broadband and fixed-line telephony business will help us accelerate this growth."

Besides upping its broadband subscriber count, Sky will be able to market its growing triple-play service, which it already provides to 3.6 million customers, to an even larger group of customers.

After it passes customary regulatory clearances, Sky said the acquisition will be completed by the end of April.

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