Sky Sees ‘Substantial’ Room to Poach Mobile Customers in U.K.

  • Pay-TV operator gearing up market-wide mobile launch in 2017
  • Quad play heightens turf wars with BT, Virgin Media, Vodafone

Pay-TV provider Sky Plc, preparing to take on telecom fixtures like BT Group Plc and Vodafone Group Plc, has an opportunity to win a “substantial” number of mobile-phone customers from its U.K. rivals, according to the company’s top executive for the region.

“There are literally millions of customers for us to go after,” Stephen van Rooyen, chief executive officer of Sky’s U.K. and Ireland unit, said Thursday at the company’s capital markets day west of London. “We’ve long had our eyes on the size of the prize. The mobile market is huge.”

Sky, which operates in five European countries, is expanding out of its home turf in pay-TV to get customers to buy as many as four different products, intensifying a battle with BT and Liberty Global Plc’s Virgin Media, which have already moved into mobile. It’s stepping into a U.K. mobile-phone market of about 15 billion pounds ($18 billion), allying with Telefonica SA’s O2, which will carry the service on its network.

The market is already crowded with four network operators -- BT’s EE unit, Vodafone, CK Hutchison Holdings Ltd.’s Three UK and O2. Virgin is among a handful of so-called MVNOs that use others’ network, as Sky plans to do.

Existing Sky customers can register for mobile service starting Oct. 31, executives said Thursday at the company’s capital markets day, a seven-hour meeting for investors and analysts at its campus west of London.

For a Bloomberg Intelligence analysis of Sky Investor Day, click here.

The company will reveal pricing later, and will begin service to existing customers this year, followed by marketwide sales in 2017, Van Rooyen said. He didn’t provide firm dates. Research suggests two-thirds of Sky’s existing customers would consider switching to its mobile service, he said.

The executives’ enthusiasm for the mobile service failed to boost Sky’s stock. It fell the most in almost three months as investors digested the company’s growth plans -- not only in mobile-phones but elsewhere in its business. Projections for Germany seemed aggressive, according to Ian Whittaker, an analyst at Liberum Capital Ltd.

“It looks like their mid-to-high single-digit revenue growth depends a lot on success in getting double-digit growth in Germany, a market that has always promised much but never fulfilled its promise,” Whittaker said in an e-mail.

The shares were down 2.4 percent to 835.5 pence at 1:06 p.m. in London, after dropping as much as 3 percent earlier, which would be the biggest loss since July 21.

Sky may enter the U.K. cellular market with attractive prices for mobile data, such as 5 pounds for 2 gigabytes per month or 10 pounds for 10 gigabytes per month, undercutting its peers, Wilton Fry, an analyst at Analysts at RBC Europe Ltd., said in a research note this week.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE