Sky clouds over for BT after CityFibre decision

BT’s market value plummeted by around £1 billion (€1.17 billion) after Sky signed up with CityFibre to deliver broadband for its network in 2025.

The transaction dealt an unexpected blow to BT, which currently provides the service for Sky via its Openreach network. Shares sank by 8.2 per cent when the news first broke on August 20, eventually closing 6.4 per cent down.

News of the Sky deal cancelled out most of BT’s gains following Bharti Enterprises’ announcement on August 12 that the Indian conglomerate had acquired a 24.5 per cent holding the company.

Shares rose to 145p (€1.70) before falling to 136p (€1.59) on August 20, giving the company a market value of £13.5 billion (€15.8 billion).

Despite the Sky setback, City insiders saw the commercial impact as “manageable” for BT.

“Sky would maintain its long-term relationship with BT’s Openreach, given the significantly larger size of its network,” analysts at the Citigroup investment bank told the Telegraph.

Meanwhile, an Openreach spokesperson said the UK’s fibre broadband market was becoming increasingly competitive.

“We’re building fibre faster, more efficiently and providing better customer experience than anyone,” the statement continued, pointing out that with more than 15 million premises reached, it expected this to reach 30 million by the end of the decade.

CityFibre is one of Britain’s largest alternative network – “alt net” – providers challenging both BT’s Openreach and Virgin media.   It already has a broadband network of more than 3.8 million homes and premises with plans to extend this to 8 million.