Joint Venture Tesco and O2
Tesco PLC
04 June 2003
For release: 4 June 2003
TESCO AND O2 TO LAUNCH TESCO MOBILE
Tesco and O2 today announced the creation of a new 50:50 joint venture, Tesco
Mobile. The new company will sell exclusively Tesco branded mobile services in
Tesco stores across the UK, using O2's technology and network, and is expected
to grow towards two million customers.
Tesco Mobile aims to launch later this year with the objective of having branded
pre-paid phones on sale in stores and through tesco.com in time for Christmas,
following which contract phones will be launched by tesco.com. Over the first
two years of operation each company will invest £8 million pounds in the joint
venture.
The 50:50 partnership will deliver great benefits to both parties and to
shoppers: Tesco gets a first class service that is squarely focussed on their
customers; O2 gets a powerful new mobile retail business that complements its
own retail stores and other branded channels.
The new service will give Tesco customers access to supermarket style offers and
the chance to earn Clubcard points when buying handsets and airtime.
Sir Terry Leahy, Chief Executive of Tesco, said:
'Customers tell us that they want simplicity and value from a name they can
trust and that is what Tesco Mobile will offer. The service will be convenient.
You'll be able to buy handsets in store or over the Internet, and charges will
be simple and clear.
'O2 is a good partner for Tesco. They have a strong management team and we work
well together.
'Customers like our new retail services. Look at the success of Tesco Personal
Finance and Tesco.com. They are keen for us to enter the Telecoms market.'
Peter Erskine, Chief Executive of mmO2, said:
'In today's competitive and complex mobile market, where customers have ever
increasing choice, we remain 100% committed to providing O2 branded services
that deliver the 'best customer experience' to our key target segments. Our JV
with Tesco perfectly complements this retail branded strategy by giving us an
ideal way of reaching important new customer segments with great mobile
services.
'The terms of the JV create a sound and sustainable business model for both
parties. O2 will make a return both through Tesco Mobile's earnings and the more
efficient use of our network capacity. We anticipate no material impact in the
current financial year but positive returns in the future.'
-ends-
Notes to Editors
The joint venture agreement is open ended with a five year lock in period during
which time neither shareholder may sell its stake.
Tesco Mobile will be located in Slough, and will have approximately 25 full time
employees in the first year of operations.
O2 and Tesco will have equal representations and voting rights on the board.
Andy Dewhurst, has been appointed as Tesco Mobile's Chief Executive.
Andy was previously Marketing Director of Tesco Personal Finance. Matthew Key,
O2 UK's Chief Financial Officer, with be Tesco Mobile's Chairman.
Tesco Mobile will market to consumers only.
Tesco Mobile will operate on a stand-alone commercial basis and will bear all
subscriber acquisition costs.
Tesco Mobile's services will be marketed and sold only through channels owned by
Tesco.
O2 will provide all of the agreed Telecommunication Services to Tesco Mobile on
an exclusive basis.
O2's network has coverage of 99% of the UK population and roaming agreements
with 328 networks in 142 countries worldwide.
Tesco has already announced it will launch a fixed line service later this year.
Tesco
Tesco is the UK's leading supermarket with over 14 million customers each week.
Telecoms will be the third retail service offered by Tesco; tesco.com is already
the largest on-line grocer in the world and Tesco Personal Finance has signed up
nearly four million customers in just five years. Tesco operates four distinct
formats, from convenience stores to hypermarkets, and has 296,000 employees
worldwide, with 220,000 in the UK. Tesco's core purpose is to create value for
customers to earn their lifetime loyalty. Tesco operates in ten countries and is
the market leader in six.
O2
O2 aims to enrich customer's lives by enabling them to get the most from their
mobile. As a leading provider of mobile services to consumers and businesses in
the UK, O2 offers a range of services including text, media messaging, games,
always on data connections (via 'GPRS') and much more. O2 (UK) Limited is a
subsidiary of O2 plc, which also delivers O2 branded services in Ireland and
Germany. O2 has approximately 12 million customers in the UK.
Tesco contacts:
Tesco - Lucy Neville Rolfe - 01992 646 606
Investor Relations - Steve Butler - 01992 644 800
O2 contacts:
David Boyd
Head of Investor Relations
mmO2
07764 905 135
01753 628 230
David Nicholas
Head of Media Relations
mmO2 plc
0771 575 9176
Glenn Manoff
Head of Communications
O2 UK
01753 281 147
07739 088 502
Tesco Corporate Affairs, New Tesco House, Delamare Road, Cheshunt, Herts, EN8
9SL
Telephone: 01992 632222 Fax: 01992 644481 Internet address: www.Tesco.com
This information is provided by RNS
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