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Sky-Vodafone 4G deal in the pipeline after trial

10th November 2014

sky 4g

Sky positioning itself to offer 4G mobile services?

A mobile deal between Sky and Vodafone looks set to go ahead in the wake of a trial in which Vodafone offered mobile services to the satellite TV company’s customers.

If the trial proves a success, Vodafone could have access to Sky’s five million customers.

Last month saw the start of the trial for 200,000 specially chosen Sky customers. Sky already sells its TV services to the mobile operator’s customers.

According to sources, Vodafone and Sky are already in talks about the following stage, which may see the mobile operator offer a 4G mobile service to the TV firm’s customer base. An MVNO with Vodafone is also being mooted.

An industry source said: ‘There are deep discussions taking place between the two and a number of deals are on the table.’

According to industry sources, the favourite choice after the trial is for a partnership that sees each company selling into the other’s customer base – similar to the deal US cable firm Time Warner Cable has with Verizon.

A source claimed: ‘Vodafone and Sky want to build on their existing relationship. At this stage a reciprocal arrangement appears to be their best option.’

It has long been rumoured that Sky has been planning a move into the mobile arena, especially as rivals such as EE and BT have already pushed their way into the market during 2014.

There was a hint of a more involved relationship with Vodafone last week, when Sky’s CEO Jeremy Darroch said that the TV firm’s relationship with the operator ‘could grow into something more meaningful. It depends how successful it is. Obviously we are trying to find something different to offer with them versus other things in the marketplace.’ His comments came as he announced Sky’s results.

He also pointed out that Sky maintains a ‘watching brief’ on BT’s foray into contract mobile in 2015. He added: ‘If an opportunity arises we are well placed to respond.’

According to CCS analyst Paola Pescatore, everyone is moving towards quad play services: ‘If Sky and Vodafone are to compete they both need to strengthen their positions in these markets. This trial is the start of something much bigger. It is a clear admission they need to do something and that the best way is to work together. This is a potential marriage in the making.’

Phil Kendall, analyst at Strategy Analytics, said: ‘As the quadplay market heats up, Sky has one key piece missing from its jigsaw, and that is mobile. It is imperative it gets some kind of mobile service up and running soon if it is to compete.’

He noted that it was not enough to have reciprocal marketing and that Sky needs to have a mobile offering with a strong Sky branding. ‘Under a reciprocal arrangement neither party gets control over pricing.’

A spokesman for Vodafone confirmed that there is a reciprocal marketing trial but would not be drawn on whether the move would result in a closer relationship between the two firms.

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