Vodafone and O2 to extend network sharing partnership

Vodafone announced on Wednesday that itself and Telefónica UK, trading as O2, have entered into non-binding heads of terms intended to strengthen their existing network sharing partnership.

The FTSE 100 telecoms giant said itself and O2 planned to extend their existing network sharing partnership term, and include 5G at joint radio network sites.

That would enable both networks to deploy 5G faster, to offer 5G services to more customers over a wider geographic area, and to do so at a lower cost.

In addition, both parties were looking to extend greater network autonomy in a number of larger cities by deploying their own separate radio equipment on approximately 2,500 sites, which represented around 15% of sites outside London.

That would give them greater flexibility to meet the needs of their customers, the companies claimed.

Both networks also intended to upgrade their transmission networks with higher capacity optical fibre cables, which would enable customers to benefit from 5G's new features, such as low latency, as well as provide both companies with greater economies of scale and an improved choice of infrastructure partners.

Vodafone and O2 said they were exploring options around their future transmission operating model, which could drive synergies in the investment and operation of their end-to-end networks.

The two companies said they further intended to devolve additional activities to CTIL - their 50-50 owned joint venture company that owns and manages the parties' passive tower infrastructure.

That would empower CTIL to take an “enhanced role” in the operation of the passive infrastructure, in order to improve the efficiency of its operations and pursue opportunities to add further third party tenants to the towers.

In that context, the two parties said they would explore a potential monetisation of CTIL after the new arrangements were finalised.

“We believe that these plans will generate significant benefits for our business and our customers as we move into the digital era of connected devices, appliances and systems on a mass scale,” said Vodafone UK chief executive officer Nick Jeffery.

“Customers will benefit from the best 5G experience available and we will deliver even faster speeds by using our spectrum holding more effectively.”

The initiatives set out in the non-binding heads of terms, and described in Wednesday’s announcement, remained subject to the parties agreeing detailed terms, concluding legally binding agreements and receiving all necessary regulatory approvals.

Vodafone and O2 said they aimed to complete those steps during 2019.

“I'm excited by the potential of these plans to meet the future needs of our customers while delivering value for our business,” added Telefónica UK chief executive Mark Evans.

“In addition, these plans would allow us to utilise the spectrum we acquired in the last auction very effectively.”