Rivals join forces to fight Everything Everywhere

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. 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 firms said the main benefit would come with the new super-fast 4G spectrum, which they would be able to roll 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. EE said it expected the regulator Ofcom to "carefully review" its rivals' deal. The two firms stressed that they will remain in competition with each other. They will not share spectrum, and customer data will be entirely separate.