June 6 2003

Tesco and O2 UK 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.

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 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 in the joint venture.

The new service will give Tesco customers access to supermarket style offers and the chance to earn Clubcard points when buying handsets and airtime.

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 UK 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."

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