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Carphone Warehouse Launches MVNO on Vodafone Network

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LONDON (Dow Jones) Europe's largest mobile phone retailer, Carphone Warehouse Group, Tuesday launched its own low cost U.K. mobile phone service, after signing a deal to rent out part of Vodafone Group's network.

Carphone Warehouse posted details of the new Talkmobile service on its Web site Tuesday, offering customers a chance to sign-up to a nine-month mobile phone contract from GBP12 a month, including 50 minutes of voice calls and 50 text messages. Most mobile operators offer 12-month to 18-month contracts.

The deal, represents an about-face by Vodafone UK, which a year ago threatened to pull all of its UK business from Carphone Warehouse through an exclusive sales deal with Phones 4u. After the news sent shares tumbling 16%, Carphone Warehouse subsequently retained prepay and contract renewals business from Vodafone.

"Here we are a year on from when it pul­led the contract and this is evidence that the relationship between Carphone Warehouse and Vodafone is far from broken. It's fascinating that they are allowing this own-branded service to be sold, but not their own contracts," said Collins Stewart analyst Mark James.

"Right now it's tiny and immaterial, but it has potential, as Carphone is aiming for a part of the market others are not," James added.

Carphone Warehouse's most expensive Talkmobile plan costs GBP18 a month, with customers getting a free Nokia, Motorola or Samsung phone. Other price plans range in cost and duration, with customers able to sign up to nine-, 12- or 18-month contracts. However, non-inclusive calls cost 20 pence a minute and texts 10 pence.

Carphone Warehouse already has a pay-as-you-go mobile virtual network operator, or MVNO, contract in place, under the Fresh brand name, through a deal with Deutsche Telekom's T-Mobile. Through Fresh, Carphone offers 15-pence a minute calls and 5-pence texts. A spokesman for Carphone Warehouse said that T-Mobile's contract and the Fresh service remained a priority, but through the Vodafone deal it would offer pay-monthly services.

Last year, Carphone Warehouse shook up the U.K. Internet service provider market by introducing its "free" TalkTalk broadband service, which led to competitors lowering their costs.

While Carphone Warehouse declined to say how significant a revenue generator Talkmobile would be, a spokesman told Dow Jones Newswires that the service was targeted at recruiting customers who didn't want to sign-up to 18-month contracts.

Faced with stiffer pricing competition in the U.K. market, Vodafone, T-Mobile, Telefonica O2 and France Telecom's Orange are all trying to lock customers into longer-term contracts by offering bundled mobile phone services.

Earlier this month, Carphone Warehouse Chief Financial Officer Roger Taylor told Dow Jones Newswires that he believed some mobile phone customers were worried about entering into longer-term subscriptions in the current economic situation.

On Oct. 11, the company reported a 19% second quarter rise in mobile phone connections to 2.8 million, but the majority of the growth came from prepay services, with longer-term subscriptions missing analyst forecasts.

-By Daniel Thomas, Dow Jones Newswires; 44-20-7842-9264; dan.thomas@dowjones.com

(END) Dow Jones Newswires

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