UK Retail Giant Signals Move Into VoIP Telephony

29 December 2005

British retail giant Tesco, which dominates the UK supermarket sector with 30.5% market share, is poised to move into low-cost internet telephony.

Australian-headquartered telco Freshtel Holdings, a world specialist in manufacturing and marketing voice over internet protocol (VoIP) products, announced Wednesday that Tesco had acquired a six per cent holding in the company - a stake valued at around A$3.7 million (US$2.7m; €2,27m; £1.57m).

According to Freshtel, under the terms of the deal it will provide the retailer with a Tesco-branded VoIP telephone service that "will launch in the UK next year and be marketed and distributed through Tesco's existing [1,800] retail channels."

Freshtel will earn a per-user licence fee plus margins on all calls to landlines or mobiles, in return for which it will provide Tesco with the network, infrastructure and billing information.

For its part, Tesco will pick up the tab for maintenance of the system, also paying Freshtel royalties on all hardware sales.

Data sourced from Sydney Morning Herald; additional content by WARC staff