UK satellite TV giant BSkyB is reportedly in takeover talks with broadband internet provider Easynet.

Sky, part of the News Corporation empire and headed by James Murdoch, is looking to muscle into telephony - a direct challenge to the might of telecoms titan BT and soon-to-be-merged cable operators NTL and Telewest.

Talks between Sky and Easynet have been in progress for some time. Last week the satellite broadcaster surprised City financiers by announcing the issue of a £1 billion ($1.75bn; €1.45bn) bond, ostensibly "for general corporate purposes".

But speculation was already under way that Sky was about to jump on the broadband bandwagon [WAMN: 14-Oct-05].

A takeover of Easynet, valued by analysts at around £155 million, would allow Sky to launch a triple play package of pay-TV, broadband and telephony services in direct competition with NTL and Telewest.

The move is facilitated by the recent unbundling of BT's local phone loop. This allows Sky (or any other alternative supplier) to take over BT lines into individual households.

Easynet has its own equipment in 250 local BT exchanges, giving it direct access to 4.4m homes and 850,000 businesses in the UK, mainly in larger metropolitan areas.

The telecoms and internet services provider confirms an approach has been made but has not revealed by whom. BSkyB declined to comment.

Data sourced from The Times Online (UK); addtional content by WARC staff