Tesco mobile arm 'under threat'

Supermarket giant Tesco’s mobile phone arm could be put out of business under network shake-up plans from UK telecoms regulator Ofcom, it was reported today.

Ofcom wants to make some of the 900MHz radio spectrum, currently used by Vodafone and O2 for second-generation calls and text services, available for other operators. Parts of the spectrum could be put up for auction in 2009.

But Tesco Mobile, which is a 50/50 joint venture with operator O2, has told Ofcom any reduction in the amount of wireless available would leave its service “severely downgraded”, the Financial Times said.

Its no-frills pay-as-you-go business has around 1.4 million customers.

In extracts of a letter to the regulator seen by the newspaper, the retailer added: “Tesco Mobile, with its joint venture with O2, may have difficulty in remaining a viable force in the UK market as the services its customers currently enjoy can only be received on competitors networks.”