British satellite TV firm BSkyB will cut prices for its broadband packages in response to competition from BT's new sports channels, the Sunday Telegraph reported.
The price cuts, which will apply to internet and television bundles sold by the Rupert Murdoch-owned firm, will be announced early this week, said the paper, citing unnamed sources.
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Last month, BT said it would screen free English Premier league soccer matches to its broadband customers, having splashed out on the rights to show 38 live matches. Available from August when the new season starts, it will be the first time such matches have been aired free in more than 20 years.
The BT announcement triggered a fall in the shares of both BT and BSkyB, as well as smaller broadband providers such as TalkTalk , over fears a potential bidding war would eat into their profits.
Sky has dominated the British pay-TV market in the last decade and still retains the rights to 116 live matches. It has expanded into BT's territory to offer broadband and telephone services to its 10.7 million households.
BT, a former state monopoly, fought back by developing an online TV service designed to persuade customers they should upgrade to its superfast broadband in order to watch it.
Analysts have been expecting BSkyB to make some tactical discounts in order to counter a marketing push by BT.
BSkyB declined to comment.
(Reporting by Rosalba O'Brien and Kate Holton; Editing by Louise Heavens)