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Tesco set to attack UK broadband market

Tesco's has announced a partnership with Cable and Wireless to attack the UK broadband market with the likes of BT, Virgin Media and Carphone Warehouse now on alert. The five-year deal with Cable & Wireless will allow Tesco to offer broadband and home phone services with the aim of building a £2 billion annual turnover and profits of £200 million in the medium term. This equates to about one tenth of the market share which BT currently holds but the company has a history of shaking up any sector which it has targeted.

The problem for the likes of BT, Virgin Media and Carphone Warehouse is the fact that Tesco has a massive reach into the UK consumer market via its core supermarket operation. It also has the experience to make of this count in terms of turnover, customers and profitability. Even though Tesco will not set the UK broadband market alight overnight there is no doubt it will be a nuisance for those who have had the market to themselves for some time and history shows it will inject significant pricing pressure in the short to medium term.

Despite the fact that businesses have been calling on the government to reduce the power of the supermarket giants in the UK for some time, their tentacles are now stretching into each and every corner of the UK economy.

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