Sky Partners with CityFibre: A New Era in UK Broadband

British TV company Sky will start offering broadband services via internet provider CityFibre's network next year, which challenges its current partnership with BT. The move impacts BT shares and opens up new opportunities for Sky on millions of premises across the UK.

British TV company Sky will launch its broadband services on internet provider CityFibre's network, the companies announced on Tuesday, resulting in a more than 6% drop in BT shares. CityFibre confirmed that Sky will roll out its full fibre broadband product next year.

The deal marks a significant challenge to BT, the country's leading broadband and mobile operator, which currently partners with Sky through its Openreach network. With around 5.7 million customers on Openreach, Sky's adoption of a second network has long concerned BT investors, according to Citi analysts.

Despite BT shares falling over 6% to 135.5 pence, Citi analysts maintain that the financial impact for BT remains manageable, given Sky's continued reliance on Openreach's extensive network. Next year, Sky's fibre broadband will be available to CityFibre's 3.8 million premises, with plans to reach 8 million premises in the future.

CityFibre Chief Executive Greg Mesch stated that the partnership solidifies CityFibre's status as the UK's third digital infrastructure platform. An Openreach spokesperson remarked that they anticipated the move as competition within the fibre market intensifies, citing their own rapid and efficient network expansion.

Backed by Goldman Sachs and Antin Infrastructure Partners, CityFibre also aims to connect 1.3 million homes in remote areas with government support, directly challenging BT's Openreach and Virgin Media O2's networks.

(With inputs from agencies.)