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Analyst Expects Sky to Bid for Budget UK Internet Provider Rival TalkTalk

Thursday, July 5th, 2012 (2:16 pm) - Score 1,345

BT’s risky £738 million grab of 38 Premier League football games (here) for its BTVision TV (IPTV) service has allegedly sparked rumours in the city that BSkyB (Sky Broadband) could be about to make a bid for arch rival TalkTalk, which may or may not be a good thing.

Liberum Capital’s Lawrence Sugarman today told the London Evening Standard newspaper that “we believe Sky is keen to build on its broadband position” and buying TalkTalk would allegedly be “an ideal way” to strike back at BT’s movement onto its home turf.

Naturally such talk should be taken with a HUGE PINCH OF SALT since no official offer is known to have been made and rumours like this aren’t uncommon. But would such a hypothetical takeover be a good thing? Financially it would certainly be good news for TalkTalk, which has struggled to plug a long-running customer bleed (here) that followed its troubled 2009 acquisition of Tiscali for £236m.

Similarly Sky, which currently has 3,863,000 broadband subscribers (here), would instantly take on TalkTalk’s 4 million internet users to leapfrog Virgin Media and BT; becoming the markets largest broadband ISP. But Sky already has a strong broadband platform, which is managed by Easynet, and merging that with TalkTalk’s wouldn’t necessarily produce many cost-savings, it might even cause some problems.

Sky also has an arguably better established reputation than TalkTalk, which has suffered after a series of Ofcom investigations in 2011 exposed flaws in its customer service and quality (many of which stemmed from the Tiscali buyout). Customers might well fear that the same problems that afflicted TalkTalk’s post-Tiscali landscape could well impact Sky too, which would be a disaster for customers, but then it might do exactly the opposite.

In any case this is all swings and roundabouts until somebody makes a serious offer. One thing that Sky really lacks though is a mobile service and there are more options at that end of the scale.

Leave a Comment
8 Responses
  1. Avatar Deduction says:

    Oh that would be nice, Sky the biggest in the UK with a REAL and cheap unlimited fibre product, finally real competition to BT.

    1. Avatar Kyle says:

      Only to a certain point! There is still the issue of Openreach. Sky would be much better going after that arm of BT Group.

  2. Avatar cyclope says:

    If they did talk over stalk stalk and everything became sky, I would not give a fig about you view free view or whatever else they want to offer , and nor would i subscribe to the sky or talk talk both are mass market isp’s
    Currently stalk talk do also have a wholesale product available via several resellers which i think is SMPF (not full LLU) if stalk talk did become sky then maybe they would also offer a fttc product via the same way SMPF and would unlimited un throttled with ISP control of profiles and choice of DLM or not same with interleave , As there are lots of reported cases of some having near full sync speeds after installation but a few weeks later their speed has seen a significant decrease due to no more than the BT profiling system and its counter part DLM a now antiquated system why is it still employed ?

  3. Avatar DTMark says:

    I’ll cross Talk Talk off the list then 🙂

    In the future, the only ISPs will be BT, Virgin Media and Sky.

    Now, if one of those made a bid for Virgin Media…

    1. Avatar FibreFred says:

      It would be nice if Fuji bought Virgin Media and invested some real money in it

  4. Avatar Liam Billington says:

    I can’t see a buy in TalkTalk would be hugely beneficial for Sky other than increasing their broadband customer base. I imagine there is a huge number of TalkTalk customers who already have Sky TV, but not Sky Phone/Broadband.

    They would be better off in making a purchase in 3 UK or Everything Everywhere and offering a mobile service to compete with Virgin on a Quad play product.

    1. Avatar J Skinner says:

      I’m one of those people you mention, being a TalkTalk phone/broadband customer since just after their “free” broadband intro, and also having Sky’s HD TV. Have to say I was ready to jump from TalkTalk to Sky’s phone and broadband due to the very competitive price compared to TT and just wanting a change, however they (TT) offered me a great deal on their cheapest fibre broadband to stay so I’m with them for another 18 months.
      Don’t think I like the idea of Sky buying TT, just lessens the number of players in the field meaning the pressure is on to focus on keeping standards/performance in customer service terms at least, from slipping for the much larger userbase and harder to improve, imho. Not a massive expert on the different broadband technologies so don’t think I can comment (but I’m looking forward to my new fibre-based toy)

  5. Avatar Deduction says:

    quote”…the pressure is on to focus on keeping standards/performance in customer service terms at least,”

    Errr nobody even if they were the last ISP in the UK are ever likely to let their standards get as low as Talk Talks, according to ofcom, not me they are the most complained about in the UK.

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