Proactive Investors - Shares in BT Group PLC (LON:BTA) are down almost 5% after major wholesale broadband customer Sky agreed a long-term deal with rival broadband provider CityFibre.
Broadcaster and telecoms services provider Sky currently uses BT's Openreach network for its 5.7 million customers, but will move to the rival CityFibre network next year, it said in a statement.
A "long-term partnership" has been agreed and "work is underway" to ensure full-fibre broadband will be available to Sky customers on the new network next year.
CityFibre's current footprint stands at 3.8 million homes today but planned to expand to at least 8 million premises in coming years.
Sky is expected to use CityFibre "to expand its customer base in areas that Openreach does not currently cover", including 1.3 million homes in rural areas.
Greg Mesch, CEO at CityFibre, said the 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".
As Britain’s largest independent full-fibre broadband network or 'alt net', CityFibre added one million ready-for-service (RFS) homes last year to bring its total to 3.2 million potential customers as it attempts to establish itself as a competitor to Openreach.
Actual customer connections are just over 400,000, according to an update earlier this summer, up 77% year-on-year.
BT's recent interim results showed Openreach made progress with its fibre-to-the-premises (FTTP) roll-out but its overall broadband base was down 28,000 quarter-on-quarter.
Financial analysts have been warning that BT faces losing millions more customers to alt-nets, with Barclays (LON:BARC) recently forecasting that Openreach's nationwide market share will settle around 60% in the medium term vs 74% at present.
** Update: confirmation of the deal added **