British media company Sky will launch its broadband services on internet provider CityFibre's network, the companies, a development that sent shares of rival BT (BT.L), opens new tab down by nearly 5%.
Sky's full fibre broadband will be rolled out to customers on the CityFibre network next year, CityFibre said in a statement.
The new deal is a challenge to BT, the country's largest broadband and mobile operator, whose Openreach network is used by Sky to provide broadband.
CityFibre, which has 3.8 million customers, is seeking to expand its network to 8 million in the coming years, and is the biggest AltNet in Britain. AltNets are building local fibre networks, challenging the dominance of BT and Virgin Media O2.
Sky's broadband would be offered to about 1.3 million homes in remote regions via CityFibre, the company said.
"This partnership with Sky is a huge vote of confidence in our business and has cemented CityFibre’s position as the UK’s third digital infrastructure platform," CityFibre Chief Executive Greg Mesch said.