Post Office takes on BT in phones launch

The Post Office yesterday launched a residential phone service to rival BT in an attempt to replicate the recent success of alternative operators such as Carphone Warehouse and Tesco.

The Post Office yesterday launched a residential phone service to rival BT in an attempt to replicate the recent success of alternative operators such as Carphone Warehouse and Tesco.

The organisation, which is struggling to boost its revenues, said it aimed to attract 1 million customers - or 5 per cent of the market - from BT within the next five years by offering significantly cheaper calls.

The Post Office has tied up with the telephones operator Cable & Wireless and the support services companies Servista and Inkfish to offer the new service, HomePhone. It will be available from early next year to customers who either go into the Post Office's branches or contact one of its call centres. Those wanting to switch will be able to do so by giving their telephone number to the Post Office, which will then organise the move from the existing provider.

The Post Office sees BT - its one-time sister public company - as particularly vulnerable to competition. BT is by far Britain's largest provider of residential telephone services, with 21 million customers.

Gordon Steele, the sales and marketing director of the Post Office, said: "People already come in to branches to pay their telephone bills. That provides an opportunity to explain this offer face-to-face. Or they can contact us by phone or over the internet."

The launch in the telephone market is the latest move by the Post Office to boost profits by turning itself into a provider of a wide range of retail services, in an attempt to increase the number of people coming into its 16,000 branches.

So far, it has launched services providing travel insurance and personal loans. It plans to offer a whole range of other financial products, including car insurance, which it is currently piloting.