Sky Limited is in talks about investing in Virgin Media O2's plan to extend its network to 80% of the country, including the possibility of spinning out the cable company's entire network into a joint venture, a source said. Virgin Media 02, jointly owned by Liberty Global (LBTYA.O) and Telefonica (TEF.MC), following a deal completed on June 1, has announced a plan to upgrade its cable network serving 15.5 million premises to full fibre by 2028, stepping up its challenge to BT (BT.L). The talks between Virgin Media O2 and Sky, owned by Comcast (CMCSA.O), are at an early stage and involve a number of investment structures, said a person with knowledge of the matter, who asked not to be named because the talks are still at a preliminary stage.

Virgin Media O2 is also in talks about providing wholesale access to its network to broadband operators including Sky, TalkTalk Telecom Group Limited and Vodafone Group Plc (LSE:VOD). Its Chief Executive Officer Lutz Schueler said last month talks were progressing but it was in "no hurry" to strike a deal. The second source said Sky may seek to give some volume to Virgin, but would also use BT.

Virgin Media O2, Sky and BT declined to comment.