An analyst has made a shock claim regarding the future of Sky as he suggests a Vodafone takeover bid is just around the corner, and could be completed in the early months of 2015. The ever present ‘sources familiar with the matter’ have confirmed the existence of Vodafone’s talks and agree that a big is likely. The move, if true, would completely shake up the UK pay-TV industry and give Vodafone the power it needs to battle the huge marketing budget of EE. The news is also striking given how recent rumours had Sky in negotiations with Vodafone to borrow some of their network infrastructure to launch a Sky mobile network, which would allow them to sell increasingly popular ‘quad-play’ packages. It would appear, however, that upon considering the deal, Vodafone have come to the conclusion that the recently expanded Sky (which now also operated in Germany and Italy) would make more sense to own than to be a partner with. Sky is currently valued at around £15 billion, though it’s unlikely that majority shareholders in the company would allow it to be sold for market value, especially during a time where their potential to open up the market has increased drastically
The move would also mirror that of BT, who are currently attempting to buy EE (formally Orange and T-Mobile) for a staggering £12.5 billion. That deal would also see a mobile network and a pay-TV company coming together under one roof and offering multi play deals for their customers. Vodafone, sensing how this might affect their business, are likely just considering their options should the deal go through, but they do have the cash required to pull off such an audacious purchase, and now that Sky operates in a couple of Vodafone’s key markets (Germany and Italy) the deal could be an excellent one for Vodafone.
Paolo Pescatore, a director at analyst firm CCS Insight has joined in the debate, stating “We predict that Vodafone buys Sky next year. It would give the company access to the fast-growing pay TV market. They are a good fit strategically and Vodafone has the cash. It would be very complementary in the UK, Germany and Italy.” Indeed, a source within the company also said “There’s definitely the potential for Vodafone and Sky to happen. Vodafone is pretty keen to build up its offering.”
The move could be good for Sky too, who have seen record numbers of people searching for the number for Sky customer services asking if they can match Virgin Media on their quoted quad-play prices. It would also take the burden off their investors who are increasingly worried about the extremely competitive UK TV market, which has not been favouring the Murdoch-owned company for a little while now. If they do decide to sell, we would expect to hear further rumblings regarding the deal within the next couple of months. At present though, these are just well founded rumours, and these sorts of deals often fall through for a number of reasons. Still, it’s food for thought and could completely change the UK market.
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