Telefonica, Vodafone slash costs in UK tie-up

Ovum analysts believe plans for a deeper networking sharing deal between Telefonica and Vodafone in the UK could cut the pair’s costs by £1 billion (€1.2 billion) by 2015.
The telcos announced yesterday that they are extending a current network sharing agreement by creating a joint venture that will pooling 18,500 base stations into a single national grid and operate their individual spectrum. The deal covers Telefonica and Vodafone’s current 2G and 3G infrastructure, and planned 4G networks. It also includes a commitment to bridge the digital divide by providing 98% indoor population coverage on current networks by 2015.
Telefonica UK chief, Ronan Dunne, says the partnership “is about working smarter as an industry so that we can focus on what really matters to our customers.” He adds the collaboration will enable the firm’s to deliver “a superfast network up to two years faster than Ofcom envisages,” in addition to bringing efficiency and coverage improvements.
Ovum analysts Emeka Obiodu and Jeremy Green say the merger has been in the cards since Orange and T-Mobile combined their UK networks to form EverythingEverywhere. “By opting to extend their light-touch Cornerstone partnership, Vodafone and Telefonica have recognized that they were competitively disadvantaged in the marketplace,” the analysts state.
The collaboration also means the UK is set to run just two physical LTE networks, the analysts point out – one from EverythingEverywhere and one from the combined Telefonica, Vodafone operation.