22/06/2006

O2 buys Be

O2 the UK mobile operator (now owned by Telefonica of Spain) has agreed to by Be a UK broadband provider for £50m. This may seem a lot for an ISP with only 10,000 customers, but the other options available to them would likely cost more.

Orange have followed Carphone Warehouse's "free" broadband offering, Vodafone have indicated they want to offer broadband/fixed line services too.

Orange had it easy as they already had a broadband division (Wanadoo), but other mobile operators would have to start from new or buy an existing broadband provider.

In the UK that gets difficult, there are only a few LLU operators. Wanadoo (well Orange) are out of the picture, it's unlikely O2 could get the TalkTalk service as that would probably mean buying Carphone Warehouse, the same for Bulldog (C&W) and Easynet are owned by Sky.

That really only left Be. They're a tiny operator compared to the others, but they have gone into 150 BT Exchanges with more planned and they were the first with ADSL2+ (24Mb/s). With the cash the O2 bring with them and their marketing O2 could push them forward and make them a leading broadband provider, which O2 can then bundle with mobile deals.

So £50m probably isn't really that much compared to what they'd have to pay to do something else. The owners of Be must be enjoying their fruits though.
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