UK ISP TalkTalk Switches MVNO Mobile Operators from Vodafone to O2

Budget broadband and phone provider TalkTalk has confirmed that their Mobile Virtual Network Operator (MVNO) agreement with Vodafone will be coming to an end after the ISP signed a new multi-year deal with Telefonica UK (O2) to take over the management of their mobile customer base.

Only last week the ISP confirmed that its Vodafone managed mobile customer base had increased by +40,000 (up from +24k in Q2) in Q3-2014 to total 348,000 and the provider said they expected to see this increase as part of their growing quad-play focused approach (e.g. free mobile SIMs with their Plus TV bundle).

However Vodafone, which earlier this year also lost another MVNO deal with BT (note: BT are now working with EE and some of their own 2.6GHz spectrum to launch a consumer 4G mobile service in Q2-2015), last week confirmed that they intended to re-enter the consumer broadband market (here) in order to take on BT and this may have played into TalkTalk’s decision to swap (competing interests make for difficult bedfellows).

At the same time customers probably won’t see a significant change since both O2 and Vodafone already have a joint network sharing agreement in place (here), while also appearing to adopt similar products and prices, which is likely to be reflected in the MVNO swap.

Dido Harding, CEO of TalkTalk, said:

“This is a significant development for TalkTalk, building on our success in mobile to date. We are ideally placed to benefit from the market shift to quad-play, with a sizeable and growing number of customers already choosing to take mobile from us. We see real opportunities in both the near term and further out, to work with Telefónica UK to further accelerate our quad-play growth.”

Ronan Dunne, CEO for Telefónica UK, added:

“We are pleased to be able to announce our commercial MVNO agreement with TalkTalk, which builds on our heritage of being the trusted provider for many notable MVNO, public and private sector organisations in the UK. This recognition, as a leading source of essential connectivity, comes as a result of our continued and significant investment in our nationwide network. We welcome the start of what we hope will be a successful and prosperous relationship for both parties.”

Interestingly the official statement noted that access to O2’s new 4G network was a “major step forward in our long term strategy to build a small cell and Fibre-To-The-Premise [FTTP] network. Coupled with our own in-home 4G spectrum and 4m points of presence this will create a powerful opportunity for us to offer seamless, low cost connectivity to our customers” (the FTTP comment reflects the 1000Mbps home broadband network being built with Cityfibre and Sky Broadband in York).

As part of last week’s results the ISP also said that “over time we expect to use TalkTalk’s 4G spectrum to build an in premise small cell mobile network that will both improve our customers’ experience and reduce costs“. The ISP has previously hinted at using indoor 4G femtocell technology on a future home broadband router to improve mobile coverage, but that was almost a year ago. This is not a million miles from what BT has planned and shows that big ISPs are learning how to leverage their strengths from both fixed line and mobile connectivity.