Alternative networks such as CityFibre, Sky and other companies are increasingly being offered the opportunity to renegotiate lower fees and better contracts.
UK telecom giant BT’s market value fell some £1bn (€1.17bn) following Sky’s signing of a broadband deal with CityFibre, one of BT’s greatest competitors. From 2025 onwards, Sky will be launching its broadband services on CityFibre’s network.
At present, Sky uses BT’s Openreach network. The deal is expected to hit BT, whose shares dropped 0.63% on Wednesday afternoon, trading at €1.59. The fall in market value also reversed several of the gains caused by the Indian conglomerate Bharti Enterprises’ recent purchase of a 24.5% stake in the company.
Analysts still expect Sky to keep using Openreach, because of its bigger network reach. However, Sky is likely to use CityFibre to access more remote rural areas which Openreach does not cover.
In the longer term, this will allow Sky to reach about 1.3 million homes in these remote areas through CityFibre, which is also participating in the UK government’s Project Gigabit. This is a £5bn (€5.87bn) programme to help remote communities have faster broadband internet.
Greg Mesch, chief executive officer (CEO) of CityFibre, said in a press release: “This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform.
“With demand for digital connectivity continuing to grow, CityFibre’s network can provide the quality and reliability that people need and the infrastructure competition the UK deserves.”
Amber Pine, managing director of Connectivity at Sky also said: “Sky’s new partnership with CityFibre will mean we can provide fast, reliable and great value broadband to more homes across the UK. This will mean we are able to reach even more people with full fibre, which is essential for the modern home.”
With the emergence of alternative networks such as CityFibre, Sky and other companies are being offered the opportunity to renegotiate lower fees and better contracts.