Vodafone Group Begins 4G Mobile Service in London This Month

Vodafone Group Plc (VOD) plans to introduce its faster, fourth-generation wireless service in the U.K. on Aug. 29, bringing the network up-to-date with its two largest competitors, O2 and EE.

The service will be offered in London this month and in 12 additional cities before the end of the year, Newbury, England-based Vodafone said in a statement on its website today. Vodafone “Red” plans compatible with 4G will go on sale on Aug. 12, the company said.

The 4G service, which is about five times faster than older technology, makes downloading videos, uploading photos and playing games on mobile devices quicker, giving networks the ability to carry more data. Carriers are counting on the technology to encourage customers to pay more for data plans.

“It’s a nudge for customers to buy higher-value packages,” Emeka Obiodu, an analyst at researcher Ovum, said in an interview before the announcement. “Having 4G will not make you the market leader, but not having 4G will mean you fall out of the market.”

Vodafone spent 790.8 million pounds ($1.2 billion) in February for spectrum to carry 4G signals in the U.K., paying the most out of the five successful bidders. EE is the U.K.’s biggest wireless carrier and began selling 4G service on its network last year, getting a head start on competitors.

4G Red

Vodafone also announced partnerships with streaming music service Spotify and British Sky Broadcasting Group Plc (BSY)’s Sky Sports pay-TV, so customers can choose access to either in their 4G contracts.

Vodafone Red 4G-ready plans are priced from 26 pounds a month for unlimited calls and texts and 2 gigabytes of data for a SIM-only contract, which doesn’t include a phone.

The 12-month contracts including a subsidized phone start at 52 pounds a month for 2GB of data.

The same plan on a 24-month contract starts at 34 pounds a month. A similar 4G plan from EE costs 41 pounds for a 24-month contract.

“Our view on what 4G brings is very different from our competitors,” Vodafone U.K. Chief Executive Officer Guy Laurence said on a conference call. “We believe it’s all about entertainment.”

Vodafone plans to cover 98 percent of the U.K. population indoors by 2015, the company said in a statement. The markets going online after London include Edinburgh, Glasgow, Leeds, Liverpool and Manchester.

O2 Offering

Telefonica SA (TEF)’s O2 unit said this month that it will begin selling 4G in London, Leeds and Bradford on Aug. 29, followed by 10 additional cities by the end of the year.

Vodafone’s rollout is part of the company’s partnership with Telefonica, which means that the two mobile providers will offer 4G in similar areas, Laurence said.

U.K. carriers are rushing to build out the networks after falling behind peers in Germany, Sweden and the U.S. as they seek to overcome relatively low customer bills that are contributing to declining service sales. Vodafone’s service revenue, excluding the effect of currency swings and acquisitions, fell 3.5 percent in the three months through June, the company’s fourth consecutive quarterly decline.

EE said that customers who upgrade to 4G pay about 10 percent more for their service on average. The average European customer spent $38 per month in 2012 compared with $69 in the U.S., the GSMA industry group said in a report in May.

To contact the reporter on this story: Amy Thomson in London at athomson6@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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