Sky 'in advanced takeover talks with Easynet'

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BSkyB is said to be in advanced takeover talks with UK broadband internet service provider Easynet. This morning Easynet's board confirmed it had received an approach that "may or may not lead to a formal offer being made for the company"—but did not reveal the interested party.

Broadband internet access has exploded in recent months, and telecommunications groups are increasingly looking to broadband networks to offer competitive packages of video, voice and high-speed internet on a single bill via internet protocol television (IPTV).

By acquiring a broadband internet service provider Sky will gain valuable expertise and a position in the market from which to expand. Easynet has unbundled 250 local exchanges and has plans to invest in unbundling a further 100, reported The Sunday Telegraph.

"A takeover of a broadband provider is Sky declaring nuclear war on the cable companies," Claire Enders of Enders Analysis, the telecoms and media research group, told the newspaper.

Easynet is not the only broadband ISP thought to be in Sky's sights; Pipex and Video Networks' HomeChoice could also be on the broadcasters' target list. Pipex has been a pioneer of UK internet access since the mid-1990s while Video Networks blazed the trail of the delivery of video entertainment services via ADSL-enabled telephone lines a decade ago.

Easynet's brief statement to the City this morning said a further announcement would be made in due course.

Meanwhile, Ovum, the telecoms research group, said in a note that Sky had been drawn into the IPTV market because broadband competition was hotting up. By gaining access to the local loop, Sky could provide more interactivity to its TV offering, generate new revenues from voice and telephony services, and "lay the groundwork for a future position in the converged telecoms/entertainment space".

It added: "Whatever move BSkyB decides to make, there's no doubt it has the financial might, content presence and brand to make some seismic shifts and significantly shape the unfolding convergent universe."

Lovelace Consulting  |  17.10.2005

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