Vodafone and Virgin Media O2 Sign UK Network Sharing Agreement
Mobile network operators Vodafone and O2 (Virgin Media) have today announced a new 10-year network sharing agreement. Crucially, the deal also includes a provision for Vodafone’s proposed merger with Three UK (aka – MergeCo), which will enable the merged company to “participate” in the same network sharing deal and divest some radio spectrum to O2.
In case anybody has forgotten, O2 and Vodafone originally established a 50:50 network sharing agreement – via Cornerstone (CTIL) – all the way back in 2012, which has helped to support the roll-out of 4G and 5G mobile (mobile broadband) services. But this has already been through quite a lot of changes as the operators have moved to commercialise their mast (tower) sites.
The recently proposed mega-merger between Three UK and Vodafone (here), which is currently going through the final phase of a tedious competition review (here), has also thrown up a new complication for the network sharing deal, which today’s deal helps to resolve. But that merger is still very much subject to CMA approval, which today’s deal has to be mindful of.
The new network sharing agreement, which will run for 10 years, thus expands on the existing deal between O2 and Vodafone – much of which is independent of the merger outcome. However, subject to completion of the merger, the operators have agreed that VMO2 will also acquire spectrum from the newly created MergeCo, establishing three scaled mobile network operators each with better alignment of spectrum holding.
This also means that MergeCo’s enlarged network will be able to participate in the network sharing agreement. “The Agreement will ensure [virtual network operators] have access to a choice of three high-quality, scaled wholesale competitors,” said the announcement.
Lutz Schüler, CEO of Virgin Media O2, said:
“This new agreement with Vodafone ensures that quality mobile network choice, performance, coverage and competition is enhanced to the benefit of millions of consumers, businesses and our mobile operator partners across the country.
We are extending and bolstering elements of our existing network sharing arrangement, while also ensuring there is a robust, balanced and functional structure in place for the long-term should Vodafone and Three’s proposed merger gain consent.
We believe that this new agreement addresses the issues we have voiced and the CMA outlined in its initial decision, and will now continue our engagement with the regulator in this spirit.”
Ahmed Essam, CEO of European Markets, Vodafone, said:
“With this agreement and our merger with Three, we will transform the mobile experience for over 50 million customers in the UK for the long-term, providing significant network improvements including more choice, better quality and greater coverage across the country.
These benefits extend to both retail and wholesale MVNO customers. The proposed merger, together with this agreement, will boost competition by establishing a strong third player in the UK mobile market and will improve the balance of spectrum holdings, levelling the playing field between the UK’s mobile operators.”
However, while this does resolve a couple of the key issues raised by the competition authority / CMA (i.e. how to resolve network sharing between the three operators and the imbalance in spectrum ownership), it still remains the case that unpicking EE (BT) and Three UK’s separate network sharing agreement is yet to be resolved.
The BT Group isn’t just concerned about the level of spectrum ownership that the combined MergeCo will hold, but also with how the impact on their network sharing deal with Three UK could give rivals access to “commercially sensitive information (CSI) relating to BT’s investment plans” and lessen infrastructure competition, among other things. A deal will have to be done to resolve this, or the CMA may need to force a solution.
At the time of writing VMO2 has declined to say precisely what spectrum they’ll get from the merger (if approved), although it’s understood to be the spectrum they want, which is compatible with their existing holdings (mid-band holdings in particular).
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook and Linkedin.
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If the current arrangement helped to support the rollout of Vodafone 5G in East Anglia and Kent, I’d hate to see what the rollout would have looked like without that support.
I hope the new arrangement requires the host operator in each area to install equipment that is capable of using the other operator’s full range of spectrum instead of just supporting a token 4G band 20 signal (plus band 1 if you’re lucky). There is no benefit for customers of rebalancing spectrum holdings if the vast majority of it is not used in large parts of the country. I hope the competition regulators can see this.
Vodafone 5G – what’s that?
On a serious note, I agree (although it’s band 8 if you’re lucky here, the lone band 1 mast has been saturated for years). As Vodafone don’t do capacity they’re currently squatting on their band 7 but not using it here, which considering the area is primarily 2G due to the lack of 4G capacity (and the big 3G switch off) is an odd thing to observe.
O2 (of all people) on the other hand are completely the other way round – bands 1, 3, 8, 20, 28, 38 and 40 all in use here. 5G too.
What does this mean in practice? It’s a lot of words but little substance.
Sell spectrum, what spectrum?
Share sites, which sites? Are sites that are currently Vodafone only in parts of London now going to be brought back into this so O2 can use them and vice versa?
Rural areas live in hope that the S in SRN (Shared Rural Network scheme) might finally deliver some results. Partial not-spots remain a massive issue for rural areas, hopefully this agreement might improve the situation because OFCOM’s SRN scheme clearly isn’t working.
A few masts here are shared, but at most of them, O2 has 5G and Vodafone doesn’t. Surely the equipment can be used at the mast to enable both networks at once?
A shared mast doesn’t necessarily mean shared equipment, often its the physical mast location that is shared but each operator has their own panels, with separate backhaul and core network. In the case of 5G not being available, it maybe the case that there isn’t even backhaul capacity or the equipment installed is not capable of it yet.
A myriad of things complicate this and not make it straight forward.
Some cell towers are only capable of broadcasting across a few bands on 4G because they lack the better equipment which can cover the entire spectrum range available on 2G/4G/5G.
That said I should expect Vodafone will start refarming its 900mhz spectrum for more 4G and 5G soon since they completed a swap and rejig with VMO2.
Meanwhile, I’m 6.5 miles out of Manchester and O2 think 2 bars of non carrier-aggregated 4G and no 5G is acceptable in 2024. I think I was getting 3Mbit or so.
Oh dear.
this wont increase coverage at all, vodafone and o2 already use the same masts with their own cells on them there is probably nowhere that has a vodafone only mast on an o2 only mast
A complete joke.
If this agreement follows the same east-west host network framework as the existing Cornerstone agreement then it should be used as a justification to block the merger – there is no benefit for consumers, particularly current Three customers, to have one of a reduced number of available MNOs be of the quality that Vodafone currently have in the east of the country.
Haha that’s going to be crap. Both of their networks have been shocking since there last sharing agreement. Vodafone removed many masts in our area and congested up the o2 network