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Is Sky plotting an O2 takeover bid?

Broadcaster and broadband provider Sky has its eye on a potential takeover of UK mobile network O2 according to reports on Tuesday.

The Financial Times’ sources claim talks have been ongoing between Sky and O2’s parent company, the Spanish network Telefonica, since late 2014.

According to the report the agreement could take the form of a Mobile Virtual Network Operator (MVNO) partnership, rather than a takeover. Although either would allow Sky to offer mobile contracts with its package deals for the first time.

Any agreement, be it a takeover or a partnership, would allow Sky to offer consumers a quad-play package of television, home broadband, home phone and mobile.

Its move is likely to be a reaction to rival firm British Telecom’s interest in buying EE from Orange and Deutsche Telecom in order to provide a similarly all-encompassing service. BT was also thought to be in talks with O2 over a takeover bid, but now appears to have centred on EE as its main target.

With EE in the hands of BT and O2 in the hands of Sky, Brits could be in line for a price war as the companies attempt to be all things to all people. However, the consolidation of media ownership could also lead to diminished competition and higher prices.

As if this wasn’t enough, the FT also reckons Three owner Hutchison Whampoa offered £9 billion to buy Telefonica from O2 before Christmas in a deal which would have made it the largest UK operator.

Sky and O2 are yet to comment on this developing story, but we’ll keep you posted.

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