Sky has announced that it will be launching its own mobile phone service next year. In order to keep up with rivals Virgin Media, BT and TalkTalk, the paid TV and broadband provider will be adding mobile voice and data services to its packages.

Like Virgin Mobile and other branded mobile services, Sky is to pay for access to 2G, 3G and 4G network. However, the deal will be with Telefonica - current owner of O2 in the UK - while Virgin Media's deal is with EE - a company also at the heart of an acquisition.

The shift in the services industry is that providers want to be able to offer complete packages of TV, broadband, landline and mobile phone for discounted monthly prices, thereby bringing customers under the one brand. Sky's mobile service will allow it to compete on a similar footing to Virgin Media and TalkTalk, who offer complete bundles.

BT will also be able to do the same when and if its buyout of EE is completed.

Telefonica is also in talks to sell its UK O2 business to Hutchinson Whampoa, owner of the Three network, for £10 billion. How this will affect Sky's mobile plans is yet to be determined, although it is likely that the deal will remain in place regardless of the new owner.

Tesco also uses Telefonica UK's network for its own mobile service.

"Through our partnership with Telefónica UK, we can build on our expertise in content, innovation and service to launch a range of exciting new services and exploit the opportunities for growth in the fast-changing mobile sector," said Jeremy Darroch, group chief executive at Sky.

Sections Sky Phones