Sky strikes mobile phone deal with O2

The UK telecoms shake up is continuing with a new deal which will see Sky offer a mobile network service in partnership with O2. See: UK's best mobile network.

With BT in the process of acquiring the UK's biggest network, EE, Sky has responded with its own deal. Telefonica, which owns O2 in the UK, will give Sky wholesale access to 2G, 3G and 4G services. Sky plans to launch its mobile service in 2016.

Jeremy Darroch, Group Chief Executive, Sky said: "As the UK's leading brand for home entertainment and communications, Sky has a proven ability to launch new services, at scale. We know our 11.5 million customers trust Sky to offer them the best quality and choice and have an appetite to take more from us."

2015 is set to see a major shift in the UK telecoms market as BT buys out EE and Three taking over O2. Quad-play – providing TV, broadband, home phone and mobile – it becoming increasingly important and this is what Sky will be able to do next year in order to compete with BT and Virgin Media.

With big competition in this area, it's surprising that Sky won't launch its mobile service until next year, giving BT a head start. Almost 40 percent of Sky's customers are on triple-play contracts but it may not have as much luck with mobile. See also: Best SIM-only deals.

"Sky may initially struggle to sell mobile services to its customers given that most, if not all, will have an existing mobile service provider. Its offering will have to be extremely competitive from the outset and Sky must clearly articulate its merits compared with rival options," said CCS Insight.

Sky will be in a decent position but CCS Insight believes there will be more moves this year. The firm said Sky is a takeover target for Vodafone – after all it has cash after selling its share in Verizon Wireless for $130bn.