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O2 has opted to not make its residential broadband service available across the UK, it has been claimed.

The move is an effort to cut costs in the face of pressure from the firm's parent company Spanish telecommunications giant Telefonica, the Daily Telegraph reported.

Last year O2 acquired small broadband provider Be Broadband for £50 million, and has since inked a deal with BT Group to allow it to use 500 of BT's local exchanges for its own forthcoming service.

However, because of the expense of using BT to connect to rural areas, O2 is to launch its service in a low-key way, according to unnamed sources cited in the report.

O2's entry into the UK broadband market was originally intended for January, but has been delayed three times.

The latest projections indicate that O2 will now launch the service in late September or early October.

O2’s rival Carphone Warehouse is estimated to lose £5 per month on each TalkTalk broadband customer connected through BT rather than through its own network.

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