BSkyB to offer broadband after takeover

BSkyB is to go head to head with BT and cable operators in the market for broadband after agreeing a £211m (€311.2m) takeover of telecoms firm Easynet today.

The satellite broadcaster will be able to package services such as high-speed internet access, pay-TV and phone calls to its customers following the 175p-a-share deal.

News of the takeover is likely to unsettle the proposed merger of cable giants NTL and Telewest, which have made such “triple play” offers a cornerstone of their marketing strategy.

It will also make BSkyB a direct competitor of the likes of BT, AOL and Wanadoo in the broadband market where connections nearly doubled to 8.1 million over the year to June 30 and are projected to grow further.

BSkyB swooped on Easynet because of its investment in “local loop unbundling” – the process that involves putting equipment into BT exchanges so companies can control the line into homes and offer a range of services.

Easynet has its own equipment in 232 local exchanges and has been targeting access to 5.8 million homes and 850,000 businesses in the UK. Many of these exchanges are in areas where NTL and Telewest have customer strongholds.

James Murdoch, chief executive of BSkyB, said: “Today’s offer reflects the exciting opportunities that now exist to combine quality entertainment with significant high-speed connections.”

BSkyB, which has almost eight million Sky subscribers, said the broadband market was also attractive because users have to pay for access and would generate new revenues.

It is thought the broadcaster will want to use the broadband service to support its move into video-on-demand.

Today’s deal comes a week after BSkyB announced that it planned to raise £1bn (€1.5bn) from a bond issue, with some of the proceeds possibly going towards acquisitions.