A discount mobile provider is preparing to launch a £10-a-month broadband service as Vodafone’s £15bn merger with Three sparks a telecoms price war.
Giffgaff, which is owned by O2, is poised to roll out low-priced full-fibre internet connections in an effort to undercut its rivals. The company plans to pay up to 500 existing customers £100 to take part in trials and will charge them just £10 a month for 500mbps speeds over 12 months.
While pricing has not yet been finalised the trial cost is well below BT’s cheapest deals of around £30 and half the price charged by many so-called “alt-net” challengers.
The move underscores how Vodafone’s £15bn merger with Three, which is expected to complete in the coming weeks, has ignited a price war across the telecoms market.
The two companies will combine to form the UK’s largest mobile network with 27m customers. The deal was cleared by regulators despite concerns that reducing the number of operators from four to three risked pushing up prices for consumers.
In reality, however, the creation of a major new rival to BT has prompted a scramble to stay competitive. Telecoms groups have been racing to launch value offerings in both the mobile and broadband markets to secure customers in the face of the new challenge.
BT, which owns EE, is understood to be considering the launch of a new discount mobile service and is stepping up its investment in value internet brand Plusnet.
Meanwhile, The Telegraph revealed on Sunday that Vodafone and Three are considering launching a TV service that would help the merged company establish a stronger foothold in the market.
It is not yet clear how Vodafone and Three will brand their services following the merger, but the companies own the Voxi and Smarty sub-brands respectively, which offer cheaper mobile deals offering data-focused contracts aimed at younger customers.
Giffgaff was founded in 2009 to offer pay-as-you-go Sim cards and monthly rolling contracts at the value end of the mobile market.
It is one of a number of mobile virtual network operators that piggyback off the network infrastructure owned by larger players. It is wholly owned by O2 parent company Telefonica, which merged its UK assets with Liberty Global to form Virgin Media O2 (VMO2) in 2021.
The new broadband service will make use of the Nexfibre full-fibre network, which is controlled by Liberty Global, Telefonica and French private equity firm InfraVia, before being expanded onto the VMO2 network over time.
Ash Schofield, the chief executive of Giffgaff, said: “Broadband is a natural evolution for us as a connectivity brand. We know people are frustrated with their current broadband offering so we’re committed to bringing together the best tech, with the experience of the people that matter most – our customers – to build better broadband.”
