O2 buys Be

21 Jun 2006

High-speed broadband operator latest to be snapped up in convergence mania

The Spanish owned mobile operator O2 is the latest mobile company to join the rush to convergence with the purchase of the high-speed broadband operator Be in a deal worth £50 million.

Founded only two years ago in 2004, Be was the first UK broadband internet service provider (ISP) to use ADSL2+ technology, which theoretically offers speeds of up to 24Mbps. Be has so far rolled its network out to 150 local exchanges and has plans to be in 400, covering half the UK population, by the end of 2006. The company says it hopes to have 70 per cent population coverage by the end of next year.

With only around 9,000 Be customers to date, O2 owned by Telefonica, is not looking to extend its customer base with the acquisition. Rather, the telco will be buying an advanced platform and a respected service that it can market to its 16 million customers in the UK. Furthermore, with the current gold rush for convergence the price of high quality partners can only go up. Providing O2 can market Be correctly, £50 million may seem a bargain.

Earlier this month the French owned mobile telco Orange, announced its strategy for a 'triple play' mobile, broadband and landline communications at a fixed rate following a similar announcement by Carphone Warehouse. Meanwhile Vodafone is planning to roll out its own broadband services. However, high speed broadband is not a one-way bet. Recently, Cable and Wireless subsidiary Bulldog has announced that it is pulling out of the consumer and small business retail broadband markets despite a huge advertising campaign.

Broadband has been a huge success in the UK in the past few years with around 10 million households currently holding a broadband subscription. With the increased pace of Local Loop Unbundling mobile operators are looking to find new ways to expand their businesses as the British market for mobile telephony reaches saturation.

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