Sky is set to purchase O2's ailing fixed-line broadband business, it has been revealed.
The TV, phone and internet provider is also taking over O2 sister firm Be Broadband's home internet service as part of a £180 million deal.
The deal will see Sky become the second-largest provider in the UK fixed broadband market, behind BT.
When the deal is complete, O2 and Be customers will be migrated onto Sky’s fully unbundled network, which is accessible to 84 per cent of UK homes.
Another £20 million may become payable to O2 parent company Telefónica UK depending on the success of the customer migration process.
Earlier this week, it was announced that O2 and Be Broadband shed another 19,400 subscribers during the fourth quarter of 2012.
The companies' combined user base fell to 560,100 fixed-line broadband customers, down from 579,500 in the third quarter of the year.
The absence of fibre broadband services and a TV offering has made it difficult for the firms to keep up with rival operators in recent times.
Sky has fared much better in comparison, building a customer base of 4.2 million broadband subscribers and four million telephony users by the end of Q4 2012.
The firm now has 3.6 million triple-play customers, who take TV, home phone and broadband bundles from the provider.
Jeremy Darroch, Sky's Chief Executive, said his firm has been the UK's fastest-growing broadband provider since entering the market six years ago.
"From a standing start in 2006, we have added more than 4.2 million broadband customers," he stated.
"The acquisition of Telefónica UK’s consumer broadband and fixed-line telephony business will help us accelerate this growth."
Mr Darroch said the O2 and Be consumer broadband and telephony business is "a great fit" for Sky, with customers used to high-quality products and strong levels of customer service.
"We look forward to welcoming these new customers to Sky and giving them access to our wide range of high-quality products, great value and industry-leading customer service," he stated.
Ronan Dunne, Chief Executive of Telefónica UK, noted that Sky offers "great value", totally unlimited broadband and super-fast fibre services.
"As we focus on delivering best-in-class mobile connectivity, including next generation 4G services, we believe this agreement is the best way of helping our customers get the highest quality home broadband experience from a leading organisation in the market," he added.