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Telefonica delays broadband launch in UK, Germany

LONDON, May 16 (Reuters) - Spanish telecoms company Telefonica TEF.MC has delayed the launch of its commercial broadband service in Britain and Germany by a few months because of teething problems, a top executive said on Wednesday.

Peter Erskine, the chairman and chief executive of Telefonica O2 Europe’s mobile phone unit, said the company would launch a UK broadband business in September, rather than in spring, after re-launching in Germany over the summer. “There is one thing that we will not do ...(and that is) to launch stuff that isn’t ready on the customer,” Erskine told a conference call in London after Telefonica reported first-quarter results.

Telefonica’s German business, O2 Germany, has struggled to integrate an inherited fixed-line business into its core mobile phone operation.

“We could have rushed out a converged service in Germany,” Erskine said. “We chose to break it up into a simplified tariff and through the year will offer a broader range of services by launching DSL (broadband) as well.”

O2 Germany, including fixed-line unit Telefonica Deutschland, saw total revenue fall by three percent in the first quarter as a host of new virtual mobile phone operators, offering services via rival E-Plus's KPN.AS network, sent prices plunging around 20 percent in Germany.

Erskine said German group margins were at around 19 percent, although the company’s German mobile phone margins alone were higher, at a flat 22 percent.

“I think it (fierce competition) has been a real wake-up call. We’re disappointed, but I think we can get this business back on the growth path,” he said, adding that the company saw “some improvement” in margins over the year.

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