UPDATE 1-BSkyB expands broadband offering with 200 mln stg deal

Fri Mar 1, 2013 2:47am EST

LONDON, March 1 (Reuters) - Pay-TV group BSkyB said it agreed to buy Telefonica's British broadband and fixed-line telephony business for up to 200 million pounds ($303.6 million) as the company continues to beef up its broadband offering.

BSkyB, Britain's dominant pay-TV group which provides fixed-line telephony, TV and broadband to 10.7 million households, said on Friday that it will pay 180 million pounds to take on Telefonica UK's half a million plus customers.

The deal, which BSkyB said will be earnings accretive in the second full year of ownership, also includes an extra contingent payment of up to 20 million pounds conditional upon certain milestones connected to migrating customers.

BSkyB said the deal will make it the second-largest home broadband provider in the country, while Telefonica said the disposal would allow it to focus on providing mobile phone services in Britain.

"Sky has been the UK's fastest-growing broadband and telephony provider since we entered the market six years ago. The acquisition of Telefónica UK's consumer broadband and fixed-line telephony business will help us accelerate this growth," Chief Executive Jeremy Darroch said.

The acquisition, which is subject to regulatory clearance, is due to complete in April.