TalkTalk enters competitive broadband fray

Telecommunications firm Carphone Warehouse has announced a cut-price residential telephone and broadband package in a radical move that will ramp up competition in the sector.

Customers signing up to the offering from the TalkTalk service will, for £20.99, plus a one-off connection fee of £29.99, receive unlimited local and national calls, and international landline calls to 28 countries, plus up to 8 Mbps broadband access.

Carphone Warehouse said that the offer was available from Tuesday to all customers in 1,000 exchange areas, covering nearly 70% of the UK population.

If the local exchange has not yet been unbundled, customers will initially be connected via BT's wholesale IP Stream service, and then migrated at a later date at no extra cost.

Carphone Warehouse's Chief Executive Officer Charles Dunstone said: "Our approach to business has always been about how little we can afford to charge our customers, rather than how much we can get away with. So today we are cutting more than 60% off the cost of the average UK residential telephony and broadband bill, and additionally providing unlimited calls to 28 international destinations.

"The residential telecoms market in the UK will never be the same again. From today, broadband is a right, not a privilege."

The company expect to reach an initial target of 1,000 exchanges by May 2007, and will invest "substantially" in marketing and customer acquisition.

Carphone Warehouse, which already has 2.6 million residential voice customers in the UK under the TalkTalk brand, anticipates acheiving 3.5 million residential customers by March 2009, of which over half will be combined voice and broadband customers.

In the first year, the investment strategy will result in an initial operating loss from the broadband business of around £50m, but by March 2008, Carphone Warehouse estimate an operating profit of £30m to 40m.

While Carphone Warehouse has a strong position, several other companies, including BSkyB, are poised to enter the broadband market this year.

The first customers for new TalkTalk package are expected to go live from the beginning of July 2006.

(SP/KMcA)