Europe Markets: BT shares skid on report Sky may back rival fiber investment

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BT Group shares slumped as much as 8% on a report that Sky would invest in Virgin Media O2’s broadband plans.

BT Group
BT.A,
-5.79%

fell as the Sunday Telegraph said Sky is closing on on a deal to back the fiber rollout, a threat to BT’s Openreach.

Virgin Media O2 is a venture between Liberty Global
LBTYA,
-2.99%

and Telefonica
TEF,
+0.44%
,
and Sky is owned by Comcast
CMCSA,
+2.29%
.
Analysts at UBS say a fiber JV/cable wholesale combined could add more than £300 million of EBITDA to VMO2 and was worth more than $3.5/Liberty Global share. The same analysis said BT could lose over £600 million of “very high margin” revenue or some 30 pence per BT share.

Sky currently spends some £760 million per year on broadband wholesale fees.

Broader European stock markets saw little movement in afternoon trade. The Stoxx Europe 600
SXXP,
-0.12%

edged up 0.1% to 453.22.

U.K. supermarket chains including J Sainsbury
SBRY,
+3.55%

rose after the weekend auction for Wm. Morrison
MRW,
-3.74%
,
which saw Clayton, Dubilier & Rice, submit the winning bid with a 287 pence per share, or £7.1 billion offer.