Centrica leaps into broadband

Centica is stepping into the dismal broadband market with its purchase of iomart's broadband business.

The £2m all-cash deal includes iomart's 2,750 UK customers, infrastructure, two customer service centres and 40 employees.

Ian El-Mokadem, managing director of Centrica (formerly known as British Gash), said the company's move into broadband had been on the cards since its September 2000 launch of British Gas Communications.

Mokadem said: "The broadband market has not run as smoothly as people had hoped but there is fundamentally nothing wrong with broadband itself."

However, Centrica's success in broadband is hinged on BT Wholesale and Oftel making things simpler for new entrants, Mokadem claimed.

"Oftel's part in broadband hasn't gone very well so far, helping new entrants get into exchanges by lowering prices. The key for us is growth. For that, we need BT Wholesale to bring prices down," he said.

Centrica's MD said the company wants to see light at the end of the tunnel within the next five years.