BT’s share price continues to decline following The Telegraph’s report that Sky is on the verge of finalizing a deal with rival broadband provider CityFibre.
Shares have dropped by 6%, wiping out more than £800 million from the company’s market value.
This potential partnership poses a challenge for BT, which currently provides broadband services to Sky’s approximately 5.7 million customers through its Openreach network.
CityFibre, one of several “alt net” broadband companies, currently covers 3.8 million premises across the UK and aims to reach 8 million by the end of next year.
Last month, BT reported a significant loss of nearly 200,000 customers from its Openreach network in the second quarter—the largest decline on record.
However, Matt Britzman, senior equity analyst at Hargreaves Lansdown, suggests that the concerns might be overstated:
“There are valid concerns about BT’s reliance on a single customer, but a deal with CityFibre is unlikely to severely impact the current relationship. CityFibre is a struggling business, eager to demonstrate progress to its lenders. It is also more focused on rural areas where Openreach isn’t expanding its fibre networks, so the potential for cannibalizing Openreach’s existing business with Sky is likely limited.”
