Sky enters into an agreement with Virgin Media O2 to become an investor in the deployment of full fiber broadband from the telecommunications operator.

The pay-TV provider is in talks to back the new merged company’s plan to challenge BT’s dominance by upgrading 14 million homes and businesses to super-fast broadband.

Virgin Media O2 revealed in July that it will build on the 1.2 million homes connected to full fiber through Project Lightning by significantly expanding its broadband network over the next seven years.

The move is expected to intensify the challenge to BT’s infrastructure builder, Openreach, by providing more opportunities to offer wholesale access to broadband retailers.

The Sunday Telegraph understands that it is also engaged in separate discussions with Vodafone and TalkTalk about the two companies becoming wholesale customers.

Broadband builders are under pressure from Boris Johnson to upgrade 85% of the UK to gigabit broadband by 2025.

BT plans to spend £ 15 billion to upgrade 25 million homes and businesses from copper telephone networks to faster fiber-optic broadband by December 2026.

The telecommunications giant is also seeking an outside investor for a joint venture with Openreach that will upgrade 5 million full fiber homes as part of its 25 million goal.

Meanwhile, Virgin Media O2 will continue to expand its cable network as it attempts to bring 1 gigabit speeds to 16 million homes by the end of this year.

The prospect of an all-fiber investment partnership with Sky grew stronger after Dana Strong, the former executive of Liberty Global and Virgin Media, took over as the company’s boss earlier this year.

Virgin Media O2 sealed its £ 31 billion merger in April, creating a telecommunications giant with £ 11 billion in revenue and 47 million customers. It is jointly owned by Telefonica and Liberty Global, the New York-listed company controlled by billionaire “cable cowboy” John Malone.

Sky talks come after Liberty Global’s investment arm partnered with buyout fund InfraView Capital Partners in September to explore building an all-fiber network in Germany.