Sky to enter Britain's mobile market with Telefonica deal

LONDON, Jan 29 (Reuters) - Britain's dominant pay-TV group Sky (Other OTC: BSYBF - news) plans to launch a mobile service from 2016 through a deal with O2 owner Telefonica, ramping up the pressure on the country's already crowded communications market.

Sky, which raced to become the country's second largest provider of home broadband after entering the market just seven years ago, will offer voice and data services to all customers through a wholesale partnership with Telefonica's O2 network.

Britain's communications market has seen a wave of deals in recent months as companies seek to combine to be able to offer a package of services including fixed and mobile calls, broadband and entertainment.

The country's biggest fixed-line provider BT is in exclusive negotiations to buy the biggest mobile provider EE and Telefonica has just agreed to sell O2 UK to Hutchison Whampoa .

Hutchison (HKSE: 0013-OL.HK - news) already operates the Three Mobile network in Britain and combining it with the second-ranked O2 will make it the top mobile operator in the country. Telefonica UK is already the network provider to a number of other brands, such as Tesco Mobile.

No financial details were given on the terms of the agreement. (Reporting by Kate Holton; editing by Neil Maidment)