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O2 says Be mine for £50m

Enters UK broadband market

The smart choice: opportunity from uncertainty

O2 is splashing out £50m to buy tiddly LLU outfit Be as part of an ambitious plan to offer broadband alongside its own mobile services.

Be only has about 10,000 customers - but that's not why O2 is buying the broadband operator. Instead, the cellco is interested in Be's infrastructure.

Based on ADSL2+, Be's network offers speeds up to 24 meg, and so far it's installed its kit in around 150 BT exchanges and plans to take that number to around 400 (serving half of the UK population) by the end of the year.

O2's plans are less clear-cut. For the moment it's business as usual, but at some point Be will be rebranded as O2. Exactly when remains unclear and O2 doesn't seem to be in too much of a rush.

It's also still too early to say how O2 will bundle its new broadband service - but it's possible by that time consumers will have tired of "free" broadband offers and opt for a more value-for-money approach.

O2 UK chief executive Matthew Key said: "This acquisition will enable us to take advantage of technology innovations to offer a wider range of joined up mobile, internet and content services for our consumer and business customers in the future."

News of O2's entry into fixed line telecoms should come as no surprise. Last month the cellco - the former mobile division of BT spun off from the incumbent five years ago and bought by Telefonica last year for £18bn - confirmed it was keen to offer fixed services.

At the time, its options were either buy a telco, build its own network, or opt for a wholesale option. Now, O2's strategy is clear. But it also means that Vodafone - which is also keen to enter the fixed line world - is now favourite to jump into bed with Cable & Wireless.

C&W recently announced its decision to pull out of retail broadband (via its Bulldog ISP) and become a wholesale provider of LLU services instead. ®

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