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O2 and Vodafone consider network sharing

O2 and Vodafone, the UK’s leading mobile phone operators, are in advanced talks about sharing their wireless network infrastructure in Britain.

The two operators are considering a network-sharing deal that could provide them with significant savings in capital and operating spending, according to people familiar with the talks.

A deal might also help solve a dispute over radio spectrum that is threatening government plans for every household to have broadband internet access by 2012.

Vodafone already has a network-sharing agreement with France Telecom’s Orange. If Vodafone finalises a deal with Telefónica’s O2 subsidiary, Orange is likely to join a network-sharing agreement between Deutsche Telekom’s T-Mobile and 3, which is owned by Hong Kong’s Hutchison Whampoa.

O2 and Vodafone are discussing arrangements for sharing the sites where mobile towers are located, as well as network equipment such as base stations.

People familiar with the talks said the arrangements might also eventually include spectrum sharing.

Jerry Dellis, analyst at JPMorgan, said a network- sharing deal between O2 and Vodafone would generate savings for both operators, with some being passed on to mobile customers.

He said a deal might end Hutchison Whampoa’s hopes of improvement at 3, which is lossmaking, and result in the Hong Kong conglomerate’s withdrawal from the UK.

Vodafone’s network-sharing deal with Orange in the UK was supposed to be far-reaching in nature, but has been scaled down. The two operators are sharing sites, but not equipment.

Vodafone’s UK business said: “We regularly review our plans to ensure Vodafone UK is best placed to take advantage of network- sharing schemes now and in the future.”

O2, which has previously expressed scepticism about network sharing, said it was reviewing the case for such arrangements.

Orange said it was exploring opportunities “which could see us open up additional bilateral or multilateral partnerships with other operators”.

The likely network-sharing shake-up comes as the government tries to solve a dispute between the mobile operators over spectrum.

Ofcom, the telecoms regulator, said last month that O2 and Vodafone should give up some of their most valuable spectrum at the 900 MHz bandwidth so it could be sold in an auction to rivals.

The 900MHz spectrum is suitable for extending broadband to rural areas because wireless signals travel long distances on it.

A network-sharing deal might allow O2 and Vodafone to pool their remaining 900MHz spectrum if some has to be relinquished, so that they can offer wireless broadband in remote areas.

The five mobile operators all offer broadband internet access on handsets based on 3G wireless technology, but the services are mostly confined to towns and cities.

Источник: Financial Times

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