Vodafone UK jumps into broadband market

11-09-2006

by Emmet Ryan

Vodafone has moved its convergence strategy forward by signing a deal with BT to provide its UK customers with fixed-line broadband services.

The deal, which is worth approximately STG400 million to BT, will see Vodafone, the largest mobile operator in the UK market, offer bundled packages of mobile and broadband services. Vodafone expects to make the offer available to its 16.2 million UK customers before the end of the year.

"This is a strategically important step in the evolution of Vodafone's business in the UK," said Nick Read, chief executive of Vodafone UK. "Choosing BT as our partner enables us to provide high quality fixed-line broadband services to customers quickly and cost-efficiently right across the UK, and this perfectly complements our national mobile coverage and mobile broadband service."

Paul Reynolds, chief executive of BT Wholesale described the move as "an excellent example of how BT's range of capabilities in communications can be deployed."

There are currently no plans for a similar fixed-line arrangement in Ireland, according to a spokesperson for the operator in Ireland, who said that Vodafone already has mobile broadband service in place in the Irish market through the 3G Mobile Connect Card. In June, Vodafone Ireland launched the Vodafone Unlimited Data service, a flat rate 3G internet service that provides unlimited access to e-mail and the internet for EUR49 a month.

With this deal, Vodafone joins a growing number of firms entering the UK's fixed-line market: O2, Orange, BSkyB, NTL and The Carphone Warehouse are all already offering mobile and broadband bundles. Surviving in such a crowded market has proved challenging, with Cable and Wireless, the UK's second largest telecoms group, recently pulling out of the retail broadband market.

Last month ENN reported that mobile operator O2 was entering the Irish broadband market. The company, owned by Spanish telecoms giant Telefonica, is investing EUR250 million in a next generation mobile network.

Vodafone gained 15,000 new subscribers in Ireland in the second quarter of the year. The company is the largest mobile operator in Ireland with 2.1 million subscribers.