It's far from a surprise that Sky wants to do everything Virgin Media does better than Virgin Media ever could. On all areas, from home phone to TV via broadband, the two companies are incredibly competitive. One area where Sky have been unable to match the Branson led company on, however, has been with mobile phone deals. For a number of years now Virgin have operated Virgin Mobile, a virtual mobile network which rebrands EE's network and is offered by Virgin to its customers in special deals. Those deals are often called 'quad-play' packages and feature TV, broadband, home telephone and mobile telephone in one, easy to pay bill. These packages have proven massively popular all over Europe and for Virgin, who have been picking up more and more customers through the deal.
All of which is why Sky are desperately eager to get into the game themselves, having witnessed their business getting slimmer and slimmer at the hands of an aggressive Virgin Media advertising campaign. As such, it's little surprise that Sky are in talks with O2 over a strategic partnership between the two. At this point, however, it's unclear what kind of partnership this would entail. One such possibility would be striking a deal for O2 to act as a MVNO in the vein of the Virgin/EE deal, which would have Sky utilising the O2 back end but rebranding their effort, possibly under the Sky Mobile name. Sky were in talks with Vodafone earlier in the year for a similar deal, but it would now appear that Sky are searching out other potential partners with which to collaborate with.
Another possible deal would be an outright takeover of O2's assets, which would give Sky a very strong position in the market and mirror the ongoing £12.5 billion acquisition of the UK's largest mobile network EE by BT, who are seeking to launch their own quad-play package in 2015. This move is seen as much less likely than O2 operating as a MVNO, as Sky are unlikely to have the liquid assets required to purchase O2 outright, having recently purchased Sky Italia and Sky Deutschland in a very costly deal. If Sky did go ahead with the purchase of O2, this would surely force Virgin to purchase Vodafone in an effort to remain competitive in a market where both BT and Sky own major UK mobile networks.
A source within Sky stated that whilst the talks are early, they are in contact and that both parties would be interested in a potential partnership. Customers too have been eager to get mobile contracts on their Sky bill, even going as far as to using the Sky contact numbers in order to voice their opinion. Getting to a deal will be difficult though, and once they are not all analysts are convinced that the UK market is particularly interested in quad-play packages at this time, given the intense and fruitful competition between mobile phone networks and smartphone makers, who see good sales from customers switching phones often.
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