Photographer: Chris Ratcliffe/Bloomberg

Sky TV Launches Underdog Bid to Crack U.K. Mobile Market

  • TV customers get free calls, texts, ability to sync recordings
  • Sales to pre-registered customers start mid-December

Sky Plc is seeking to lure customers to its new U.K. mobile service with adjustable data plans and discounts for those who already subscribe to its market-leading pay-TV package.

The broadcaster, whose largest shareholder is Rupert Murdoch’s 21st Century Fox Inc., started selling the wireless offering to employees on Tuesday and plans to bring on pre-registered customers by mid-December. That will be followed by a wider U.K. introduction in January, the company said at a briefing.

Sky is seeking to crack the country’s 15.2 billion-pound ($19 billion) mobile market, building on a previous expansion into broadband by capitalizing on its existing subscriber base and its reputation for keeping customers happy. Existing TV subscribers will get free calls and texts, as well as the ability to record shows to watch on their phone.

“We are really excited about getting into a new market,” Stephen van Rooyen, chief executive officer of the U.K. and Ireland business, said Tuesday at a meeting with reporters. He said it would be the U.K.’s most flexible mobile service. “We think what we’re going to deliver is great value.”

In targeting its existing pay-TV customers first, Sky is trying to poach mobile subscribers from competitors including the dominant wireless incumbents, BT Group Plc’s EE, Telefonica SA’s O2 and Vodafone Group Plc. The product could also help Sky keep TV customers from peeling away.

The so-called mobile virtual network service will run on O2’s network. Sky will maintain greater control than what’s typical in MVNO deals, including overseeing pricing, billing and customer service.

At the end of 2015, EE had 29 percent of U.K. mobile subscriptions, followed by O2 with 27 percent, Vodafone with 19 percent and CK Hutchison Holdings Ltd.’s Three with 11 percent, according to industry watchdog Ofcom. Sky will initially offer SIM-only plans, and said it won’t begin selling handsets until spring 2017.

Sky plans to charge 10 pounds a month for 1 gigabyte of data, the average per user in the U.K. For an extra 5 pounds a month, customers can get 3 gigabytes, and for 20 pounds, they can get 5 gigabytes. Subscribers will be able to accrue unused data each month and avoid penalties by buying more if they go over set limits.

A Sky customer who isn’t already a TV subscriber will pay 20 pounds a month for 1 gigabyte of data and unlimited calls and text, versus 20.99 pounds for a similar plan with EE.

Analysts’s estimates vary for how much of the U.K. market Sky can take. Ahead of Tuesday’s briefings, they ranged from as little as 1 percent to 10 percent over several years.

Macquarie Bank Ltd.’s Guy Peddy, in a note last week, said Sky could capture 3.12 million customers by 2021, 50 percent more than his initial estimate, based on the opportunity and the sophistication of the offer.

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