Sky backs BT’s faster broadband in boost to former monopoly

Bloomberg

Sky Plc is backing a push by BT Group Plc to move more Britons onto faster internet services, in a boost to the former monopoly.
Sky, which resells internet services from BT’s network unit Openreach, has a new agreement to encourage more of its UK customers to take up higher-speed fiber-based connections after Openreach introduced discounts for wholesale customers in July, a spokesman said.
Openreach, under pressure from regulators and the UK government to modernise its national network, will benefit as users switch onto services using more fiber by being able to rip out some of the older copper that’s costly to maintain.
BT’s national network will still largely rely on copper wires for “last-mile” connections to customers’ homes.
The deal with Sky could encourage more communications operators to pursue similar agreements. In a research note, Jefferies analyst Jerry Dellis said a big initial take-up should spur companies such as TalkTalk Telecom Group Plc and Vodafone Group Plc to follow suit, without making specific reference to the Sky deal.
Dellis raised his price target for BT to 265 pence from 250. BT shares were up 0.6 percent at 224.2 pence in London.
Sky will encourage most of its customers to take up the faster connections, the spokesman said. The satellite broadcaster has no UK broadband network of its own and needs faster fixed-line data connections as more viewers switch from traditional TV channels to internet-based, on-demand services.
The BT deal means Sky can speed take-up of ultrafast and full-fiber broadband while ensuring that competition at a network level stays strong, the Sky spokesman said by email. About 40 percent of Sky’s customers currently buy fibre-based broadband, up from 27 percent a year ago.
Britain’s coverage of the full-fibre broadband that delivers the fastest internet speeds lags many other developed countries and the government is pushing BT to move quicker to upgrade the network.