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).

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).

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.