The move will see Pipex’s 3.6 gigahertz spectrum licence, which allows wireless internet services to be provided over large distances, spun into a new company, Pipex Wireless.
Wireless internet networks are planned for London and Manchester next year with another eight cities due to be covered in 2008. Eventually, the service will be in the UK’s 50 biggest metropolitan areas, Pipex said.
If successful, the move will see large urban areas across the UK transformed into "internet hotspots" where subscibers to the service can surf the net.
The new venture, to be called Pipex Wireless, will use the WiMAX technology. Pipex owns one of only two such national licenses for the UK.
Last week Ofcom, the telecoms watchdog, relaxed the conditions on Pipex's spectrum licence to allow the company to offer WiMAX commercially. Intel has been trialling the technology as part of its development of the chips that will power the technology, which is one of several competing standards currently being developed around the word.
Peter Dubens, the Pipex executive chairman, said that apart from the expense of building a new network, a "massive" marketing campaign will be needed to build awareness of the service around the UK.
The company said that having a wireless broadband offering would help set Pipex apart from the likes of NTL, BT and Sky, which have all launched or are planning "triple play" packages of voice calls, broadband and TV. BSkyB is 37.2 per cent owned by News Corporation, parent company of Times Online.
News of the Intel deal came as Pipex reported a 30 per cent rise in 2005 turnover to £133 million, underpinned by rocketing demand for broadband internet access. Pre-tax profits rose to £7.1 million, compared with £6.2 million in 2004, in line with expectations.
The group, which last month bought the Homecall fixed-line business from Phones4U owner John Caudwell for around £43 million, said it had traded "well" in the first quarter of 2006. With more of its subscribers signing up for multiple services, churn had fallen and it was "protecting" profit margins.