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Vodafone enters fixed-line broadband, snubs C&W

Mobile operator Vodafone has struck a deal with BT to provide fixed-line broadband to its customers in the UK.

The move is a response to O2 and Orange who already offer fixed-line and mobile products to their customers. Vodafone has confirmed that it plans to launch the new service before the end of the year.

In a statement Vodafone said: “This partnership enables Vodafone’s customers to benefit from bundled packages of mobile and broadband services nationwide, due to BT’s unique footprint in the UK,”

The decision to offer fixed-line broadband has been a long time coming. For months, analysts and observers have speculated that Vodafone would team up with a fixed-line operator to offer the sort of packages its rivals are already marketing today.

The deal with BT however, is a huge disappointment for Cable and Wireless which wanted to supply the world’s biggest mobile operator as part of its recovery to becoming a major wholesale supplier of broadband in the UK.

The deal will silence shareholder unrest about Vodafone’s strategy under the leadership of Arun Sarin, chief executive. Sarin has been under fierce pressure to shift the firm’s stagnant share price amid concerns it is not adapting its strategy in line with competition in the telecoms market.

Scott Morrison, research director at analyst Gartner believes Vodafone’s move is not as simple as it looks and doubts the strategy will have the effect the firm would like on its installed base. “Orange reacted to the Carphone Warehouse deal faster and Vodafone is playing catchup against both mobile operators and others like Sky which effectively stole a march on the mobile operators’ aspirations,” he said. “Vodafone’s is following Orange to shore up its mobile position and clearly other providers out there are positioning packages like this as the expected norm. for entry level offerings.”

Asked if he thought the move would ease pressure on Arun Sarin, Morrison was magnanimous. “To be fair, Sarin has been talking about this for along time… it’s taken time because Vodafone has not been decisive on new product delivery. That they’re doing it at all is a reflection of what is expected but… It’s not coming to market with something people haven’t already seen.”

For Cable and Wireless, Morrison says the loss of such a prestigious deal won’t be something that will have the UK chief, John Pluthero, jumping for joy but it is understandible. “C&W just doesn’t have the LLU (local loop unbundling) to satisfy Vodafone and because Vodafone is behind the curve with this strategy… they had to play safe and go with BT.”

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