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OFT to Rule on Sky Takeover of O2 UK Home Broadband in May 2013

Friday, April 19th, 2013 (10:13 am) - Score 2,575
o2 uk

The anticipated £180m+ acquisition by BSkyB (Sky Broadband) of O2 UK and BE Broadband’s fixed line internet and phone customers (full details), which was originally due to complete by the end of April 2013 (subject to regulatory clearance), could suffer a delay.

The Office of Fair Trading (OFT), which is currently examining whether the deal complies with the merger provisions of the Enterprise Act 2002 (i.e. a regulatory test to ensure that the deal doesn’t result in a “substantial lessening of competition“), has already closed the case to new responses and now appears to have set a later “expected decision” date of 16th May 2013 (estimated).

Sadly the OFT doesn’t guarantee that clearance will be announced on or before this estimated date, which is the regulators “best up-to-date estimate” of when a decision is expected to be announced.

This means that customers might have to wait a little bit longer to find out precisely what Sky has planned (i.e. product offers) because O2/Sky aren’t likely to confirm the final details until after the OFT has given clearance, although a source close to the proceedings confirmed that there’s no dependency on having OFT approval ahead of completing the transaction.

OFT Statement (March 2013)

The transaction involves the acquisition of the fixed home broadband and telephony buisness of Telefónica UK Limited under the Be and O2 Home Broadband brands.

The Office of Fair Trading is considering whether this agreement has resulted in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

So far we haven’t seen any significant reasons why the OFT might reject the BSkyB deal. The UK is already home to a fairly competitive consumer broadband market and the O2/Sky deal isn’t likely to have much of an impact on that one way or another.

Assuming the deal is given clearance then the phased migration over to Sky’s platform, which should take a total of around 18 months to complete, is expected to get underway towards the latter part of this summer 2013. Meanwhile O2, in an attempt to secure Sky’s “extra contingent amount” of up to £20 million, are continuing to offer customers who wish to leave plenty of incentives to stay (12 months free broadband and big mobile call rebates).

Credits to several of O2’s customers for pointing the OFT date out to us.

Leave a Comment
11 Responses
  1. Avatar Ian Freeman

    I just asked for a MAC key and they sent me one within minutes! Didn’t even try to hold onto me!

  2. Hmm maybe they’ve changed their policy now.

  3. Avatar Alloneword

    Well i got a years free broadband and £100 of my mobile, mind you they still moan about data usage but i just ignore them now and I’m still with them FOR NOW.

    All1

  4. being a Sky Broadband customer Iam not looking forward to this merger, Sky are attainin the “customers” only and none of the Telefonica LLu backbone, this means sky are going to be taking on 500,000 customers on top of their current up-take, sky are suffering some congestion on exchanges just from their normal customer up-take… it doesn’t take a genius to work out what comes next…blistering slow connections when o2/BE customers arrive!

  5. Avatar Anon

    “this means sky are going to be taking on 500,000 customers”

    Unlikely – the number of people leaving because of this takeover (i.e. not wanting to become part of the Murdoch empire) is significant. I wouldn’t be surprised if O2 fail to get their extra £20m (on top of the baseline £180m buyout) for “successful migration of customers” or however the term is written.

  6. Avatar Paul

    I would advise any present O2 LLU “All Rounder” Customer to switch to Xilo “Elite LLU” (who use the same O2 LLU Wholesale equipment at their local exchange). Only about £3 more a month for no traffic management and a static IP address! Only down side £48 connection charge. but as they are they are number one in the ispreview top 10 – it’s worth it.

  7. Avatar Windy

    When you say “the same O2 LLU WS equipment”, doesn’t that imply that SKY will be purchasing it as well as the rest of O2 BB network ?
    Or do you mean “it’s the same type of equipment” ??

    • Avatar Paul

      I understand O2 are keeping the Wholesale division, so they can continue to supply ISPs such as Xilo and business broadband.

  8. Avatar cyclope

    Whether sky Buy the telefonica LLU kit or not I doubt would matter that much, as the O2 wholesale service would continue until any contractual terms had been forfilled,Then if sky have purchased the dslams, they will probably off load them
    My guess is they will connect that kit to their network,and it will be used for the wholesale service & possibly in place of sky connect in exchanges where telefonica llu exists and sky’s doesnt,But the majority of BE/02 customers will be assimilated onto sky’s SVBN system,(Full LLU)where possible,@ exchanges where sky haven’t installed SBVN kit , customers will probably be connected to the legacy Easynet stinger Dslams so will stay SMPF until they install the svbn kit

  9. Avatar Ian P

    As those of us who have (had) O2 Broadband know, this along with home phone has been sold to SKY.

    Over the years we have been vary careful not to give our mobile number to any commercial organisation to prevent endless nuisance calls.

    However recently, we have received several call from SKY on our mobile numbers trying to sell us various packages.

    Who the hell gace O2 authority to give SKY our mobile numbers, it’s not as if SKY has bought the mobile business.

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