Sky mobile phone service launching in 2016 following deal with O2

Sky has announced that it will finally launch a mobile phone network in the UK in 2016 having signed a deal with O2 UK's parent company Telefonica.

The multi-year deal with O2, which has been predicted for some time, will see Telefónica UK give Sky access to its 2G, 3G and 4G networks across the UK. Sky says it plans to launch its first mobile telephony services to customers in 2016.

Sky says it will announce "details of its consumer proposition" - including the name of the new service - closer to launch.

The Sky announcement comes at a time when the UK mobile network landscape is going through a major transition, with BT in the process of purchasing EE while Three's parent company Hutchison Whampoa are in negotiations to buy O2 UK.

Sky will join the likes of Tesco Mobile and GiffGaff in launching what is known as a MVNO (mobile virtual network operator), whereby the Sky service will piggyback on the O2 infrastructure. Sky had been in talks with Vodafone about a partnership as well as with O2, according to earlier reports.

Sky will join Virgin Media and TalkTalk as quad-play operators offering broadband, TV, landline and mobile to customers, a group BT is eager to join with the purchase of EE.

Imran Choudhary, consumer insight director at Kantar Worldpanel said: "Sky TV currently has 62% of the British consumer pay TV market which gives it a huge existing customer base for its new mobile service. By doing a deal with O2, Sky is now able to offer a full quad-play package and has safeguarded itself against the likes of Talk Talk and the impending BT/EE partnership. For companies such as Vodafone this move further reinforces the need to forge their own alliances or be left out in this rapidly-changing landscape."

Jeremy Darroch, chief executive at Sky said: "As the UK's leading brand for home entertainment and communications, Sky has a proven ability to launch new services, at scale. We know our 11.5 million customers trust Sky to offer them the best quality and choice and have an appetite to take more from us.

"Through our partnership with Telefónica UK, we can build on our expertise in content, innovation and service to launch a range of exciting new services and exploit the opportunities for growth in the fast-changing mobile sector."