Vodafone teams up with Telefonica to combine UK infrastructure

Telecoms peers Vodafone and Telefonica are to create one national grid in the UK by pooling together parts of their network infrastructure, the companies announced on Thursday.

"The plan will deliver real benefits for today's mobile phone users by creating two competing networks that will be able to offer indoor 2G and 3G coverage targeting 98% of the UK population by 2015, delivering mobile coverage and mobile internet services to the vast majority of UK households," Vodafone said.

The agreement is also expected to lay the foundations for the next generation 4G mobile services which will be rolled out as wide and as quick as possible "helping to close the digital divide between rural and urban areas."

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

The UK divisions of Telefonica and Vodafone will create a 50/50 joint venture company through the consolidation of their existing basic network infrastructure, which includes towers and masts. As such, each group will have access to a single grid of 18,500 masts, 40% more sites than each operator currently has.

However, the companies assured that they will be running independent and competing services to one another, with each keeping complete control over their wireless spectrum, core networks and customer data.

The gross asset value of Vodafone UK's existing basic network infrastructure was £438m at the end of April.

"This partnership will close the digital divide for millions of people across the country and power the next phase of the smartphone revolution," said Vodafone UK's Chief Executive Officer Guy Laurence.

"It will create two stronger players who will compete with each other and with other operators to bring the benefits of mobile internet services to consumers and businesses across the country. We have learned a lot from our existing network collaboration but now it is time for it to evolve," he said.

The launch of 4G services is still subject to the outcome of a forthcoming Ofcome auction of new spectrum and both Vodafone and Telefonica will act wholly indecently in that auction, the companies said.

BC