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In what seems to be the biggest shake-up in the UK’s telecom industry since the advent wireless broadband networks at the beginning of this decade, Vodafone and O2 are planning to pool their networks, according to the Guardian.

The Guardian reported that the discussions between the two telecom operators were at “an advanced stage”, with the final announcement is expected to be made in a couple of weeks or so.

The website further notified that Vodafone’s current partner, Orange, is planning to ask T-Mobile and 3, a division of Hutchison Whampoa Ltd, for their permission to connect with their network sharing venture, potentially leaving UK with five of its top most broadband operators using two networks only.

Although, all five operators continue to function under their own brand names, but any such collaboration would enable the companies to bring down their 51,000 base stations across the country, which eventually help in reducing operational costs substantially, the Guardian added.

However this collaboration would surely lead to much cheaper calls and reduced internet costs, this could spark concerns amongst consumer groups over reduced competition.

The website further asserted that both the Office of Fair trading and the Competition Commission were likely to evaluate the two deals to check if they amounted to a merger that would hamper the competition in UK.

See:-   here (http://www.itproportal.com/portal/news/article/2009/3/12/vodafone-and-o2-merge-operations-cut-costs/#15f).

The slant on this story taken by ITProPortal is counteracted by TheRegister today.

See:-   http://www.theregister.co.uk/2009/03/13/vodafone_o2_sharing/ (http://www.theregister.co.uk/2009/03/13/vodafone_o2_sharing/)

Some further news on this on spanish site- www.expansion.com. some translated excerpts:

Telefonica and Vodafone plans to share their networks  

The two groups are studying the advantages and disadvantages of a global pact to share infrastructure investments to enable them to cut costs without jeopardizing the growth or lose competitiveness.

The reason for these negotiations is to address the economic crisis and consequent drop in demand by a considerable reduction in costs.

Last week the British media reported that Vodafone and O2, a subsidiary of Telefonica in the UK, negotiated a deal to merge its networks in the country. The agreement between the two seems to be very close, but in reality is just the tip of the iceberg, since both groups have decided to look at the possibilities of expanding the alliance internationally, to have consequences in all countries that are present in both groups at once.

Telefónica and Vodafone, at present, compete in five European countries: UK, Spain, Germany, Czech Republic and Ireland. In addition, Vodafone has 23 million users in Italy, a country where Telefónica has no direct presence, but where is the main shareholder of Telecom Italia, which has 35 million users.

Fresh update from MobileToday (http://www.mobiletoday.co.uk/O2_and_Voda_confirm_network_share.html):


The operators will share networks and work on joint builds of new sites, as revealed by Mobile

O2 and Vodafone have confirmed the deal that will see them share mobile network assets across Europe. The partnership was revealed by Mobile at the start of this month (March).

Telefonica and Vodafone will use the agreement, which is expected to save ‘hundreds of millions of pounds’ over the next 10 years, to aid the roll-out of their networks.  The two companies said the deal will pave the way for improved mobile broadband coverage across the UK.

In the UK, both companies will focus on joint build of new sites and consolidation of existing 2G and 3G sites.

Meanwhile, in Ireland, the operators will open all network sites for sharing by the other party.

In Spain, the operators will to extend existing site share agreement from 2007, which includes the shared usage of power, cabinets and masts.  To date 2,200 sites are shared under this agreement and during 2009 and 2010 additional sites will be added.  In Germany, the networks will share existing 2G and 3G sites.

Telefónica Europe CEO, Matthew Key, said:  ‘In a fast changing business climate, operators need to look at different ways to serve customers both now and in the future.  This industry-leading collaboration means that Telefónica and Vodafone will continue to compete strongly against each other in local markets, while giving our customers enhanced mobile coverage in more places, using fewer mast sites.  This will also create significant benefits for Telefónica shareholders.  We are actively exploring additional areas for cooperation and, by reducing our costs in areas of the business that customers don’t see, we can ensure that we invest in areas they truly value.’

Vodafone Europe CEO, Michel Combes, said: 'Vodafone has led the market in developing effective network sharing business models, and continues to drive the scale and scope of such agreements.  This is a further example of Vodafone’s ongoing commitment to deliver the highest levels of service quality for our customers while delivering greater cost efficiencies to the business.  This move will enable us to focus our resources on developing more innovative and market leading services while delivering on our pledge to reduce the environmental impact of our network roll out.’

There is yet another update on TheRegister (http://www.theregister.co.uk/2009/03/23/telefonica_vodafone_network/)

Vodafone and Telefonica, which trades as O2 in the UK, have signed a massive network sharing deal to work together across Europe.

The two will share networks in Germany, Spain, Ireland and the UK.  Talks are still going on to finalise a similar deal in the Czech Republic as well as looking at other areas of possible collaboration like transmission services.

The agreement will mean savings of hundreds of millions of euros and the companies promise it will mean better service quality for customers and faster roll-out of mobile broadband.

Each operator will continue to manage their own calls independently.  Depending on the country the two will either share network sites and masts or work together on building new, shared masts and base stations.

In Germany Vodafone and Telefonica will share existing 2G and 3G sites and share masts for microwave backhaul.  In Ireland both firms will open all sites and work together on new sites.

In Spain the two will extend an existing sharing agreement covering power, cabinets and masts.  Currently this covers 2,200 sites but this will be increased in the next two years.

In the UK the two will concentrate on building new joint sites and consolidating existing 2G and 3G sites. The companies said: "The network electronics Nodes B (3G), BTS (2G) and the radio network controllers which are linked to the core network are to remain independent."

Vodafone shares were up two per cent in a rising market on the news.

The full release is available from here (http://info.telefonica.es/pressoffice/).