Sky in talks to invest in Liberty Global fiber network

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Sky is in talks about a potential investment in a new all-fiber network to be built by Liberty Global, which would significantly increase the pressure on BT in the UK broadband market.

Liberty Global has appointed LionTree, the investment bank, to find partners for a new joint venture that will build a complete fiber optic network for millions of homes outside of the most populous areas of the country. He officially registered the group as Liberty Fiber Ltd with Companies House last week.

Virgin Media, the UK’s second-largest telecommunications network, and owned by Liberty Global, is reportedly the company’s main tenant. In recent weeks, Sky has also opened discussions about participating in the joint venture as an investor and client, according to three people with direct knowledge of the negotiations.

Discussions between Liberty Global and Sky over the new network are in their early stages, people said. Sky is in separate talks on a wholesale deal to use Virgin Media’s existing cable network that covers half of the country.

Sky was acquired by Comcast, the US cable operator, for £ 30.6 billion last year and has been seen as a potential kingmaker in UK broadband. It is leveraging BT’s network to provide broadband to 6 million customers and is moving away from using satellite dishes to turn to fiber optic lines to provide television services to its customers. However, he does not plan to build his own network, which means he can influence those who are.

BT, TalkTalk and a host of smaller players including CityFibre – which is co-owned by Goldman Sachs – and Hyperoptic are also investing in all-fiber networks. A wholesale deal with Sky to serve its millions of customers would help justify the cost of building new fiber networks.

The media company has written to smaller rivals in recent months to explore co-investment deals and big potential. The move, along with talks with Virgin Media, will increase pressure on BT’s Openreach to strike a deal with Sky as it continues to ramp up its full fiber plans.

A deeper connection between Virgin Media and Sky would represent the latest twist in the long-standing relationship between American billionaires Brian Roberts, chief executive of Comcast, and John Malone, who controls Liberty Global. They have dominated the US cable market for decades.

Liberty Global will seek “code powers” from Ofcom – the approval needed to start building networks in the UK – in the coming days and plans to start laying new fiber by next summer, according to someone with direct knowledge of the schedule.

Sky and Liberty Global declined to comment.

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