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
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K YR1: SThree: At SThree, we like to be dif...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is a mul...

Guru Careers: C# Project Team Lead

£55 - 65k (DOE): Guru Careers: A unique opportunity for a permanent C# Develop...

Day In a Page

Fifa corruption: The 161-page dossier that exposes the organisation's dark heart

The 161-page dossier that exposes Fifa's dark heart

How did a group of corrupt officials turn football’s governing body into what was, in essence, a criminal enterprise? Chris Green and David Connett reveal all
Mediterranean migrant crisis: 'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves,' says Tripoli PM

Exclusive interview with Tripoli PM Khalifa al-Ghweil

'If Europe thinks bombing boats will stop smuggling, it will not. We will defend ourselves'
Raymond Chandler's Los Angeles: How the author foretold the Californian water crisis

Raymond Chandler's Los Angeles

How the author foretold the Californian water crisis
Chinese artist who posted funny image of President Xi Jinping facing five years in prison as authorities crackdown on dissent in the arts

Art attack

Chinese artist who posted funny image of President Xi Jinping facing five years in prison
Marc Jacobs is putting Cher in the limelight as the face of his latest campaign

Cher is the new face of Marc Jacobs

Alexander Fury explains why designers are turning to august stars to front their lines
Parents of six-year-old who beat leukaemia plan to climb Ben Nevis for cancer charity

'I'm climbing Ben Nevis for my daughter'

Karen Attwood's young daughter Yasmin beat cancer. Now her family is about to take on a new challenge - scaling Ben Nevis to help other children
10 best wedding gift ideas

It's that time of year again... 10 best wedding gift ideas

Forget that fancy toaster, we've gone off-list to find memorable gifts that will last a lifetime
Paul Scholes column: With the Premier League over for another year, here are my end of season awards

Paul Scholes column

With the Premier League over for another year, here are my end of season awards
Heysel disaster 30th anniversary: Liverpool have seen too much tragedy to forget fateful day in Belgium

Liverpool have seen too much tragedy to forget Heysel

Thirty years ago, 39 fans waiting to watch a European Cup final died as a result of a fatal cocktail of circumstances. Ian Herbert looks at how a club dealt with this tragedy
Amir Khan vs Chris Algieri: Khan’s audition for Floyd Mayweather may turn into a no-win situation, says Frank Warren

Khan’s audition for Mayweather may turn into a no-win situation

The Bolton fighter could be damned if he dazzles and damned if he doesn’t against Algieri, the man last seen being decked six times by Pacquiao, says Frank Warren
Blundering Tony Blair quits as Middle East peace envoy – only Israel will miss him

Blundering Blair quits as Middle East peace envoy – only Israel will miss him

For Arabs – and for Britons who lost their loved ones in his shambolic war in Iraq – his appointment was an insult, says Robert Fisk
Fifa corruption arrests: All hail the Feds for riding to football's rescue

Fifa corruption arrests

All hail the Feds for riding to football's rescue, says Ian Herbert
Isis in Syria: The Kurdish enclave still resisting the tyranny of President Assad and militant fighters

The Kurdish enclave still resisting the tyranny of Assad and Isis

In Syrian Kurdish cantons along the Turkish border, the progressive aims of the 2011 uprising are being enacted despite the war. Patrick Cockburn returns to Amuda
How I survived Cambodia's Killing Fields: Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape the US

How I survived Cambodia's Killing Fields

Acclaimed surgeon SreyRam Kuy celebrates her mother's determination to escape to the US
Stephen Mangan interview: From posh buffoon to pregnant dad, the actor has quite a range

How Stephen Mangan got his range

Posh buffoon, hapless writer, pregnant dad - Mangan is certainly a versatile actor