O2 takes £3m bashing from Tesco and Tchibo

O2 is considering getting further into bed with the mobile virtual network operators (MVNOs), chief executive Peter Erskine has revealed.

Erskine said the operator, which already has MVNO agreements with Tesco in the UK and Tchibo in Germany, had been "very selective" in selecting the partners it allows to piggyback on its network.

He also said the mobile operator was debating whether to sign further agreements but wouldn't be drawn on whether the potential reseller networks would be in the UK or abroad.

The O2 CEO added that both of the joint ventures had "generated good customer growth". Since its launch in October, Tchibo has brought in around 250,000 new users - part of the three million new subscribers that joined the operator over fiscal 2004, taking its customer total to around 24 million.

However, the company's full year results revealed that the two MVNO deals have hit O2 in the pocket, with Tesco and Tchibo costing the operator £3m between them.

According to the operator, this was due to the cost of acquiring new customers through Tesco and the cost of launching the Tchibo operations.

Despite the knock on its bottom line due to the MVNOs, O2's EBITDA (earnings before interest, tax, depreciation and amortisation) rose to £1,768m in 2004, up from £1,367m in fiscal 2003.