(Bloomberg) -- BT Group Plc’s stock slid the most since May 2023 after major client Sky agreed to roll out broadband services on a network run by a fast-growing rival.
Sky, which offers streaming and broadcast content as part of Comcast Corp., will begin rolling out services on independent operator CityFibre’s network starting next year. The fiber provider plans to reach at least 8 million premises in coming years, from around 3.8 million homes currently.
BT shares fell 7.7% to 134.40 pence at 1:48 p.m. in London, the biggest decline since May 18, 2023.
“This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform,” CityFibre Chief Executive Officer Greg Mesch said in a statement.
Sky is a prominent client of BT’s Openreach network. The telecom firm, one of the UK’s biggest, has in recent years faced fierce competition from so-called “alt nets” racing to build fiber networks and connect homes across the UK. Many of those smaller companies are mired in debt from expansion, and analysts have predicted an imminent wave of consolidation.
CityFibre is one of the biggest and most closely watched of those up-and-coming competitors. It’s unclear though how extensive the deal is, or which areas CityFibre will help Sky cover.
It’s “a very positive move forward for CityFibre regardless, as Sky hitherto was showing no inclination to deal with anyone beyond Openreach,” said Karen Egan, an analyst at Enders.
BT lost broadband and mobile customers last quarter as well as contracts from business customers, pushing sales lower as new Chief Executive Officer Allison Kirkby works to streamline the business. Indian billionaire Sunil Bharti Mittal, who’s company Bharti Global agreed to buy a 24.5% stake in BT last week, highlighted the company’s fiber expansion as a crucial part of BT’s future.
An Openreach spokesperson said Tuesday that the move was “expected as the UK’s fibre broadband market becomes ever more competitive.” The company has reached 15 million premises with fiber and seeks to double that by 2030, according to the spokesperson.
(Updates with shares, comment from BT’s Openreach starting in third paragraph.)
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