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Telefonica and Vodafone pen massive European network sharing deal

Tony Chan | March 30, 2009 | 0 Comments

Telefonica and Vodafone have signed a massive deal to share network infrastructure in Germany, Spain, Ireland and the UK that would results in “cost efficiencies of hundreds of millions of pounds for each company over the 10 years.”

As part of the collaboration, the two operators, representing close of half a billion subscribers globally, will use the agreement to facilitate the roll out of their respective networks in the countries, and enhance service quality for customers. The agreement will also reduce the environmental impact of both companies’ roll out activities, due to the consolidation of existing sites and joint build of new sites, the companies said.

“In a fast changing business climate, operators need to look at different ways to serve customers both now and in the future. This industry-leading collaboration means that Telefónica and Vodafone will continue to compete strongly against each other in local markets, while giving our customers enhanced mobile coverage in more places, using fewer mast sites,” said Matthew Key, CEO of Telefónica Europe. “This will also create significant benefits for Telefónica shareholders. We are actively exploring additional areas for cooperation and, by reducing our costs in areas of the business that customers don’t see, we can ensure that we invest in areas they truly value.”

Michel Combes, CEO of Vodafone Europe, added: “Vodafone has led the market in developing effective network sharing business models, and continues to drive the scale and scope of such agreements. This is a further example of Vodafone’s ongoing commitment to deliver the highest levels of service quality for our customers while delivering greater cost efficiencies to the business. This move will enable us to focus our resources on developing more innovative and market leading services while delivering on our pledge to reduce the environmental impact of our network roll out.”

In Germany, both companies have agreed to share existing 2G and 3G sites, including their use for microwave backhaul. In Ireland, the sharing of infrastructure is extended to all sites and the two companies will jointly the planning of new sites. In the UK, both companies will work on joint builds of new sites and consolidation of existing 2G and 3G sites.

The companies will also extend an existing site share agreement – covering shared usage of power, cabinets, and masts – signed in 2007 for their operations in Spain, which is already deployed in 2,200 sites to date.

According to the announcement yesterday, both companies are now engaged in detail discussions to extend the agreement to operations in the Czech Republic, as well as exploring further areas of co-operation, such as sharing of transmission infrastructure.