Satellite firm BSkyB to buy ISP Easynet - source

UK satellite TV broadcaster BSkyB is set to announce the acquisition of high-speed Internet provider Easynet this week as it attempts move into the broadband market, a source familiar with the matter said on Sunday.

The move would allow BSkyB to offer broadband, video-on-demand and telephony services, putting it in head-to-head competition with the merging UK cable companies NTL and Telewest as well as BT Group.

BSkyB, which is 37 percent owned by Rupert Murdoch's media conglomerate News Corp, said last week it planned to raise about 1 billion pounds with a bond placement, with some of the proceeds earmarked for acquisitions. The company also signalled last month that it wanted to move to a hybrid Internet and satellite delivery platform.

The Sunday Telegraph, without citing any sources, said the Easynet deal could be worth up to 150 million pounds. Service providers Pipex and Video Networks have also been mentioned as possible Sky acquisition targets.

Easynet has been investing heavily in "local loop unbundling" by placing its own equipment in BT Group's local exchanges. The resulting high-speed network reaches about 4.4 million consumer households, mostly in metropolitan areas of England and Scotland where NTL and Telewest are strong.

In September, Easynet said its first-half underlying core profit (earnings before interest, tax, depreciation, amortisation and exceptional items) rose to 3.3 million pounds from 3.2 million a year earlier. First-half revenue rose 12 pct to 77.1 million pounds.

The acquisition of Easynet would be the boldest strategic move so far by BSkyB Chief Executive James Murdoch, Rupert's son. Since he arrived, the company has aggressively targeted new subscribers to reach its goal of 10 million by 2010, up from about 8 million by the end of this year.

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