Vodafone and O2 to save 'hundreds of millions of pounds' by sharing networks

 

The mobile rivals O2 and Vodafone have announced far-reaching plans to share their phone networks as they look to cut costs and fight back against market-leader EverythingEverywhere.

O2 and Vodafone will unite to create one national grid of 18,500 masts and sites which should boost mobile signal strength for customers – particularly indoors and in "not-spots" in rural areas.

The mobile operators, respectively the second and third biggest in the UK, said they wanted to collaborate because booming smartphone usage is putting pressure on the networks.

In a further move to pool their resources, the two companies will split coverage of London and the UK.

O2 will manage the East, including north London, plus Northern Ireland and most of Scotland. Vodafone will cover the West, plus south London, and Wales.

Vodafone UK's chief executive Guy Laurence and O2's chief executive Ronan Dunne said there would be cost-savings but would not give any financial details. However, 2,500 mobile masts should be decommissioned out of the pair's existing 21,000. It should mean Vodafone and O2 each get access to an extra 40 per cent in the number of masts. Analysts suggested the savings could run into hundreds of millions of pounds.

Mr Dunne said: "While it absolutely means that we deploy more cost-effectively, that's not the focus. It's about delivering a better service to customers." He added that it made sense to share resources which are mere utilities as operators focus on innovation.

O2, owned by Spanish telecom giant Telefonica, and Vodafone are keen to launch their 50-50 joint venture as soon as possible because it would benefit customers who use existing 2G and 3G spectrum. But the companies said the main benefit would come with the advent of super-fast 4G spectrum, because they would be able to roll it out across the UK faster.

Messrs Dunne and Laurence insisted the tie-up was not driven primarily by the rise of EverythingEverywhere (EE), the UK parent company of T-Mobile and Orange, which merged in 2010. "Its timing is relevant to 4G but not relevant to other operators," Mr Dunne said. EE said it expected the regulator Ofcom to "carefully review" its rivals' deal.

Ofcom is not set to hold its much-delayed auction of 4G spectrum until later this year or early 2013. But the Vodafone-O2 tie-up could allow them to move into 4G more quickly and challenge EE, which is set to launch its own 4G service on some of its existing spectrum. O2 and Vodafone have had a limited partnership, called Cornerstone, since 2009 but this new alliance goes much further. The two companies stressed that they will remain in competition with each other. They will not share spectrum, and customer data will be kept entirely separate.

A Vodafone spokesman declined to say precisely how UK coverage will be split, citing commercial reasons.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future