UK - Tesco in deal with Cable & Wireless to build its telecoms business

[guardian] Supermarket seals deal with Cable & Wireless that will allow it to offer discounted internet and landline phone packages

Tesco is building up its assault on telephone and broadband firms with plans for hundreds of new in-store telecoms outlets and discounted packages of internet and landline services.

Britain's dominant retailer is already a growing force in the cut-throat telecoms market and said it saw more opportunities for big returns from mobile-phone users and broadband customers as it sought to build up its non-grocery revenues.

Bosses announced a five-year deal with Cable & Wireless for it to supply Tesco with wholesale broadband services. Lance Batchelor, the company's telecoms chief executive, said the tie-up would allow Tesco to offer customers home-phone and broadband packages for the first time. That will pit it against names such as Virgin Media and BSkyB, which have long wooed customers with bundled services.

Batchelor flagged up Tesco's "unique ability" to differentiate its offerings through Tesco's rewards scheme and by bundling a wide range of goods and services, for example a laptop sold with a broadband package. "Our goal: to become a leading provider of telecoms services and products to Tesco customers, with the medium-term potential to generate around £2bn revenue and around £200m profit," he said on Tesco's website.

The supermarket already has a fast-growing mobile network, which it launched in 2003 as a joint venture with O2, and it sells handsets as well as mobile and broadband contracts through 100 phone shops in its stores. By also selling telecoms services online and from the supermarket aisles in Tesco stores that do not have a phone shop, the retailer's weekly sales rate of mobile contracts has quadrupled during 2009.

It now plans to double its number of phone shops to 200 by the end of 2010 and eventually hold a nationwide network of 500, pitting it against high street specialists such as Carphone Warehouse .

The new details of Tesco's telecoms push come weeks after it outlined plans to build a full-service bank offering current accounts and mortgages. Andrew Higginson, the chief executive of Tesco's retailing services arm, today reiterated the company's focus on financial services and telecoms as "big, profitable sectors".

He said: "We have demonstrated we can be successful in specific product categories with modest market shares ... However, significant parts of these markets remain untapped."

The retailing services arm – including the Tesco.com home delivery service – contributes about £500m to Tesco group profits and the company wants to double that to £1bn.


Tesco plots to conquer telecoms sector