O2, Vodafone Reported to Be in Network Sharing Talks

UK operators, O2 and Vodafone are reported to be in advanced talks regarding sharing their network infrastructure. Citing people close to the talks, the Financial Times that a deal "could provide them with significant savings in capital and operating spending". Vodafone's CEO, Vittorio Collao is currently seeking annual cost savings of £1bn by 2010-11 to bring the UK divisions' operating margins up to the average compared to its other country networks.

The deal could be a prelude to resolving a dispute with the regulator which wishes to refarm 900Mhz spectrum, taking it from the two early incumbents and offering some to the later entrants. If the two operators are able to pool both their network infrastructure, and share their radio spectrum, that could release surplus spectrum back to the regulator.

02, which has previously expressed scepticism about network sharing, said it continued to review the case for such arrangements.

Vodafone already has a network sharing deal with Orange, which was expanded a few months ago to include sharing the costs of engineering, maintenance, and technology. The sharing deal saves the two operators around US$1.45 billion a year. They already share the RAN elements of their respective networks. The RAN includes mast, antenna, sites, site support cabinet and power supply as well as antennae, combiners and transmission links, Nodes B (3G), BTS (2G) and the radio network controllers which are linked to the core network.

For its part, Orange is reported to be considering a sharing deal with T-Mobile and Hutchison 3G UK.

As the original phone networks in the UK, Vodafone and O2 (at the time, called Cellnet) were granted exclusive rights to the 900Mhz spectrum. When Orange and T-Mobile (at the time, Mercury 121) were licensed they were required to use the 1800Mhz spectrum. Hutchison 3G UK is a 3G only operator.

On the web: Financial Times

Posted to the site on 12th March 2009