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BSkyB Grabs Telefonica’s U.K. Broadband Biz

Satcaster ups ante in fight with Liberty's Virgin

LONDON

News Corp.’s U.K. paybox BSkyB is buying the British broadband business of Spain’s Telefonica in a $300 million deal.

The agreement will make the satcaster Blighty’s second biggest broadband provider after British Telecom, and demotes Virgin Media to third place.

Virgin Media was recently bought by Liberty Media for $23.2 billion — Rupert Murdoch-controlled BSkyB’s Telefonica U.K. acquisition is likely a response to that deal.

It will increase BSkyB’s broadband subscriber base from 4.2 million at the end of last year to 4.7 million, provided all Telefonica U.K.’s 500,000 broadband and fixed-line customers stay with the provider.

Virgin Media has 4.5 million broadband customers, while BT has 6.6 million.

BSkyB has grown its broadband biz from a standing start during the past six years under the leadership of its previous CEO, James Murdoch.

The paybox now has 3.6 million triple-play customers, who buy TV, broadband and telephone services from the satcaster.

Getting BSkyB’s TV subs to take broadband is increasingly important to business as the number of new TV subs continues to dwindle.

The Telefonica deal will cost BSkyB $270 million, with an additional $30 million payable dependent on the successful completion of the transfer of customers between the two firms.

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