Telecom signs resell deal with Sky TV

Sky TV's Auckland control room. Photo / supplied

Sky TV said it has signed a three-year deal with Telecom to resell all of Sky's television services.

"The new agreement enables Telecom to offer triple and quadruple play services by bundling and billing for Sky services with their homeline, mobile and broadband products," Sky said in a statement.

"Announcements about pricing and timing of Telecom's new packages will be made available closer to launch," it said.

Rob Mercer at Forsyth Barr said the reseller contract is "long overdue" and Telecom "clearly needed to respond to Vodafone's triple play offering. Vodafone has been very successful in connecting almost 30,000 Sky subscribers and offers households an uncapped data deal for its broadband customers that access Sky's online service."

The agreement reduces the risk to Sky that Telecom would attempt to revitalise its own content offering, Mercer said.

"Telecom had basically let Vodafone have a free run at offering a triple play package and, while this hasn't yet shown up in Telecom's customer numbers, it makes good sense for Telecom to negate Vodafone's point of difference."

Mercer said the deal may be the first insight into how the decision to separate the retail business from the Chorus lines business will change Telecom's retail strategy.

The announcement comes days after Telecom won the bulk of the government's $1.35 billion funding to build an ultra-fast broadband network, which will see the country's biggest phone company demerge itself into two listed companies.

Earlier this month, the Commerce Commission said it will include content arrangements in its probe into potential barriers to broadband uptake, ignoring stern objections from the pay-TV operator.

"Telecom customers will have an expanded choice of TV services with new Sky packages to be offered in addition to Telecom's existing TiVo product," the company said.

Telecom has been reselling Sky's services since about 2002, as has its rival, Australian-owned Telstra.

Sky shares gained 0.7 per cent to $5.67, down from its recent high at $5.90 but well up on its year low at $4.52. Telecom shares rose 1.1 per cent to $2.395 while Telstra shares are unchanged at $3.97.