Carphone to start price war with offer of free broadband, papers say

UK mobile phone retail giant Carphone Warehouse is widely expected to announce the launch of a free broadband service later this week, whereby customers who sign up to its Talk Talk landline service will receive high speed internet access for no additional cost, according to local news reports. If the rumours are true, Carphone looks set to trigger a major price war in the UK’s booming broadband market. Carphone has yet to comment on the speculation.

Carphone Warehouse is the biggest player in the UK's residential carrier pre-selection (CPS) market. Formerly solely a mobile telephony retailer, it branched out into the CPS market under the TalkTalk banner in February 2003 and followed up with a combined telephony and broadband service over BT's network in November 2004. In December 2005 Carphone boosted TalkTalk's size and reach with the acquisition of two of its rivals. The company agreed to pay energy company Centrica GBP132 million (USD233 million) in cash for Onetel and a further GBP8.5 million to Sweden's Tele2 for its UK and Irish assets. The Onetel deal in particular gave a significant boost to the telco's broadband business, adding 60,000 high speed internet customers and almost doubling TalkTalk's broadband customer base. Following the acquisitions, Carphone had an estimated 135,000 broadband subscribers at the end of 2005, some way behind market leaders ntl and BT, which had 2.83 million and 2.33 million users respectively.