Tesco Mobile Ponders Giffgaff Style Foray into UK Home Broadband
Mobile provider Tesco Mobile, which is one of the UK’s largest virtual (mvno) mobile network operators and home to a customer base of close to 6 million, is reportedly looking to expand their existing partnership by pondering a giffgaff style move into offering full fibre broadband packages.
At present Tesco Mobile harnesses O2’s (Virgin Media) national mobile network and, according to the Financial Times (paywall), has already held “initial talks” about offering home broadband services over VMO2 and Nexfibre’s full fibre (FTTP) networks – all of which share some of the same parentage. We imagine this would only encompass the XGS-PON powered full fibre areas of both operators, similar to Giffgaff’s arrangement.
Regular readers may recall that Tesco has been down the home broadband route before. But the company’s financial difficulties of the time meant that this side of their business was ultimately sold to TalkTalk in 2015 (here) – reflecting a fixed line broadband base of 75,000 customers (inc. 20,000 phone users).
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However, we suspect the shift by giffgaff into broadband, which also uses O2’s national network, may have prompted Tesco Mobile to consider a rival. The potential for the provider to leverage both their Tesco Clubcard discounts and cross-selling broadband with mobile will no doubt also be significant, particularly now that they have such a sizeable mobile base and a decent reputation for quality.
The difficult part may be in reaching an agreement that will enable them to launch broadband packages that are as attractive as those being offered by giffgaff. Unlike giffgaff, Tesco Mobile is not part of the same group of companies, and so may not benefit from the same level of preferential treatment that such an association usually attracts.
On the other hand, Virgin Media (O2) and nexfibre are currently trying to attract non-group wholesale partners to their consumer fixed line platform (the Vodafone example), not least because this would help to give the Competition and Markets Authority (CMA) a better impression of their competitive proposition and thus support the £2bn acquisition of full fibre altnet Netomnia (here).
A spokesperson for Tesco Mobile said that, as part of the “normal course of running our business,” they have “regular conversations with potential partners about opportunities“. But the mobile provider added that they “currently have no plans to launch into the broadband market” (always take any use of “no plans” with a pinch of salt, as plans can and often do change, frequently at very short notice).
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At present all we can say is that Tesco Mobile has not yet made a final decision about whether to re-enter the broadband market.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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I suppose “every little helps” but the points are worth so very little in real terms per month it wouldn’t sway myself but some people are obsessed with collecting points. Maybe they would tempt people with five hundred of them (£5) for switching. £5 for switching is hardly going to attract the masses but 500 points could.
Time is a flat circle.
Heretic!
Tesco Mobile is 50% owned by O2.
If it does launch, it would be yet another VM02-affiliated company launching over nexfibre and Mustang full-fibre.
Apparently your best shot at launching on nexfibre is to let VM02 buy a significant portion of your company.
I have past experience both at Tesco Mobile and at Vodafone so I can say, there’s not much to be gained by Tesco entering this field. I’ll give some context on the MNOs offering home broadband and their reasoning behind it.
Vodafone rely heavily on it and so do the sales agents. They try and fit everyone up for 150Mbps for £23 (before promos) and that earns the business roughly ~£150 in one go. That’s not why the staff sell it – HBB unlocks Vodafone Together discount pricing which halves the price of Unlimited data + 100GB data on all SIMs, including standalone SIM Only plans and device airtime plans. They can sell you a phone contract and give you Unlimited data for only £20-30 instead of £40-50 because broadband gives your account half price discounts. Customers are happy getting uncapped, speed boosted, global roaming “max” plans for half the usual price. Only existing customers can get special discounts (the website price is what new customers pay) so sales agents rely on HBB and trade-ins to reduce the price for new customers.
It’s just a button press on the sales flow thanks to One Touch Switching. Vodafone wants HBB customers so much, they’ll even pay up to £200 of your early termination fees. That’s how big of a revenue driver it is. They need the customer base on their balance sheets to justify network investment.
With a MVNO, this logic no longer makes sense. HBB is costly and requires additional investment to deploy, which Tesco Retail won’t give them. In my opinion, they would be much better off trialling MBB instead as it’s lower risk and higher reward.
They could stock 4G dongles in-store via phoneshop or electronics aisle. Just by offering dongles for sale, it will provide an extra use case for SIM Only plans. Perhaps add Unlimited data to PAYG for more options, something like Three’s £35 bundle. I’ve seen many people already using Tesco Unlimited SIMs to replace their home broadband with a mobile hotspot, so I know it’s viable for sure.