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O2 explores fixed line options

Punters want converged services, says cellco

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Mobile outfit O2 - which was snapped up by Spanish telco Telefonica for £18bn last year - has confirmed it is chewing over the idea of entering the fixed line telecoms market in the UK.

Earlier this month, it was reported that O2 was sniffing around Bulldog - the LLU operator owned by Cable & Wireless (C&W) - and Tiscali UK, as it explored demand for fixed/mobile products.

O2's sister operation in Germany already offers a fixed/mobile product and execs are keen to find out if there would be an appetite for such products in the UK.

In a conference call this morning, O2 chief exec Peter Erskine signalled that there might some truth in those earlier reports as he explained how "convergence is something that customers will want, and we'll be learning from our experiences in the Czech Republic and Germany and doing similarly in the rest of our businesses", the FT reports.

Should O2 decide to move into the fixed line world - five years after the former mobile division of BT was spun off from the incumbent fixed line operator - it could either buy a telco, build its own network, or opt for a wholesale option.

In fact, these are the same options Vodafone is currently mulling. Earlier this year it emerged that Vodafone is also looking to branch out into the fixed line world to offer voice and broadband products alongside its own mobile services.

Although the giant cellco has also been linked with Bulldog and Tiscali, Vodafone boss Arun Sarin suggested in a newspaper interview that the telco would most likely opt to resell wholesale voice and broadband services rather than buy a service provider.

Sarin said: "The question is, as the world evolves with services like VoIP and Wi-Fi and all that, should we expand the services our company provides? I am not sure why one would want to buy a fixed-line asset when one can resell broadband DSL and other bits we may want to bundle." ®

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